The stock markets have been a great source of returns for investors, but there comes a time when investors will need to cut back risks and re-adjust their portfolios.

“There are several instances when adjustments are warranted,” Mark Mirsberger, CEO of Dana Investment Advisors, told CNBC.

Mirsberger explained that if your short-term cash requirements have changed, then your allocation will also need to change as well.

“If you were planning on retiring next year but have to delay that five years, your longer time horizon probably means you can afford to take slightly more risk in your retirement portfolio,” Nick Holeman, a certified financial planner and the head of financial planning at Betterment, told CNBC.

However, the opposite is also true. If you are entering your retirement years, it is more prudent to cut down risks and aim for a steadier source of income from your investments to meet your day-to-day needs.

Financial experts have warned that if your risk tolerance has changed, it is important to rearrange your investment allocations to adjust for this new reality.

Allan Roth, CFP and founder of financial advisory firm Wealth Logic, also noted that after a long bull market like what we have seen today, many investors see that their stock allocations now take up a larger percentage of their portfolio than they planned for. Consequently, it is important to make frequent rebalances to better manage risk exposure.

One way for ETF investors to better manage risk and generate some income along the way is through something like the Nationwide Nasdaq-100 Risk-Managed Income ETF (NYSE Arca: NUSI), which seeks current income with a measure of downside protection.

NUSI follows a rules-based options trading strategy that seeks to produce high income using the Nasdaq-100 Index, an index of the 100 largest non-financial stocks on the Nasdaq exchange. The ETF may potentially complement traditional equity and fixed income allocations or function as a possible hedge for investors.

The Nationwide Risk-Managed Income ETF establishes a collar strategy to generate monthly income. Collar strategies involve holding shares of the underlying stock while at the same time buying protective put options and writing calls for the same security. A put option gives its owner the right but not the obligation to sell the underlying asset at a specified price and on a specified date. A call option gives its owner the right but not the obligation to buy that asset instead.

For more news, information, and strategy, visit the Retirement Income Channel.


This article was prepared as part of Nationwide’s paid sponsorship of ETF Trends.

ETFs, hedge funds, equities, bonds, and other asset classes have different risk profiles, which should be considered when investing. All investments contain risk and may lose value. Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. The Fund’s return may not match or achieve a high degree of correlation with the return of the underlying index.

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Call 1-800-617-0004 to request a summary prospectus and/or a prospectus. You may also download the prospectus at the link above or by visiting etf.nationwide.com. These prospectuses outline investment objectives, risks, fees, charges and expenses, and other information that you should read and consider carefully before investing.

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