With retirement planners and retirees themselves scrambling for more income, annuities are getting more looks. However, investors can shore up income streams and complement annuities with the Nationwide Risk-Managed Income ETF (NUSI).
NUSI is an actively managed portfolio of stocks included in the Nasdaq-100 Index and an options collar. Per index rules, the fund only invests in the top 100 largest by market cap, nonfinancial stocks listed on NASDAQ. A collar strategy involves selling or writing call options and buying put options, thus generating income to hedge some downside risk. The strategy seeks to generate high current income monthly from any dividends received from the underlying stock and the option premiums retained.
“As pension plans fade, today’s investors may want to look to annuities to bridge the retirement gap, one expert said,” reports Dhara Singh for Yahoo Finance. “At a time when the future of Social Security is uncertain, with some experts predicting reduced payouts after 2031, Schlifske said people will flock to annuities to bridge that gap.”
NUSI Elevates Retirement Income
NUSI can act as a complement to traditional equity and fixed income allocations or as the ideal protective hedge for investors with heavy exposure to technology and growth stocks because the fund is a “rules-based options trading strategy that seeks to produce high income using the Nasdaq-100 Index,” according to Nationwide.
A covered call refers to an options strategy where an investor writes or sells a call option on an asset which they already own or bought on a share-for-share basis to generate income via premiums derived from the sale of the call options.
NUSI is also relevant in the current environment, given the sheer amount of advisors that lean towards annuities.
“Two-thirds of retirement investment advisors would recommend annuities to clients, according to research released by RetireOne, a platform for fee-based insurance solutions,” according to Yahoo Finance.
Additionally, the Nationwide ETF offers high income levels and downside equity market protection, the latter of which isn’t common among annuities.
Overall, NUSI can be a solid complement for retirees considering annuities or cashing out of life insurance policies.
For more on income strategies, visit our Retirement Income Channel.