Now may be an ideal time for investors to consider premium income to help diversify portfolios.
In addition to fixed income and equity income, premium income can serve as a third source of income for portfolios. Writing puts on the S&P 500 – effectively underwriting market risk – can be a capital-efficient strategy to generate income in uncertain market environments.
Currently, fixed income and equity markets are experiencing uncertainty and volatility. Premium income could be advantageous in the current environment as it’s not as sensitive to movements in both the equity and bond markets.
The Neuberger Berman Option Strategy ETF (NBOS ) is an options-based strategy that seeks long-term, structured, risk-efficient returns with less volatility than broad equity markets.
The fund sells put options on the S&P 500, which allows it to generate income while also providing similar returns to the S&P 500 with less risk. This means that the investor may give up some upside potential, but they also have some protection against downside performance.
The fund’s distribution rate is 8.0% as of December 3, a competitive yield when compared to option income category peers.
What Sets Neuberger Berman’s Premium Income ETF Apart
Collateral income and active premium-capture drive returns for the Neuberger Berman ETF. Importantly, NBOS does this without significantly increasing credit or equity beta exposures.
Furthermore, the premium income ETF owns short duration fixed income securities, focused on U.S. Treasuries, which provide interest income. The fund’s active premium capture seeks to generate returns through premium collection.
NBOS was created from the conversion of the Neuberger Berman U.S. Equity Index PutWrite Strategy Fund, a mutual fund. The ETF was launched on January 29, 2025.
See more: NBSM: A Solution for Diversifying Away From Large-Cap Growth
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