With rising rates and market volatility, investors are currently in a challenging income-oriented environment. So, Harvest Volatility Management has partnered with Nationwide Financial to develop a suite of risk managed income ETFs to deliver an alternative source of income in such an environment.
“As we all know, fixed income has been very challenged, equity volatiles are quite high, and for us we wanted to develop that could deliver a consistent monthly income for the income-oriented investors,” said Garrett Paolella, managing director and portfolio manager at HVM.
Striving for Income
Speaking with ETF Trends Editor-in-Chief Lara Crigger for ETF Leaders, powered by the New York Stock Exchange, Paolella said that he’s hearing a “lot of concern” from investors and advisors about a good number of things. They’re increasing cash allocations, they’re worries about rate hikes, “volatility in the fixed income market” as well as in the equity markets.
“They’re striving for income,” Paolella said at Exchange: An ETF Experience 2022. “It’s a very challenging income-oriented market right now.”
Paolella explained that since fixed income is seeing negative real returns, advisors are “just generally trying to find alternative ways to meet the needs of their clients.” Obtaining income at a time of heightened volatility is “a big question” now.
Managing Risk
While obtaining income is one of the biggest challenges for investors, so is managing risk. For the advisors and intermediaries that HVM has spoken to, Paolella said “it’s a challenging market to just manage risk for clients.”
“They’re used to seeing their accounts go up for the last 10-plus years,” Paolella said, adding that when we enter an environment where the 60-40 asset allocation isn’t working and clients are losing money, that drives the discussion about managing volatility and risk while also trying to meet their income needs.
The HVM managing director reiterated that the products in the Nationwide risk-managed income suite “were developed specifically to meet the income need, lower volatility overall in the portfolio, but seeks to have a tax-efficient income on a monthly basis.”
Nationwide offers a suite of actively managed ETFs within equities for financial advisors. These funds include the Nationwide Nasdaq-100 Risk-Managed Income ETF (NUSI), the Nationwide S&P 500 Risk-Managed Income ETF (NSPI), the Nationwide Dow Jones Risk-Managed Income ETF (NDJI), and the Nationwide Russell 2000 Risk-Managed Income ETF (NTKI).
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