Gig economy workers enjoy flexibility, but many lack access to traditional, employer-sponsored retirement plans. The Nationwide Risk-Managed Income ETF (NUSI) is ready to fill that gap.
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. The fund is a “rules-based options trading strategy that seeks to produce high income using the Nasdaq-100 Index,” according to Nationwide.
For gig contractors, NUSI is all the more relevant today. While the gig universe rapidly expanding, its retirement options are not following suit.
“Changes have been coming fast and furiously for workers in the gig economy,” writes Morningstar’s Christine Benz. “Before the pandemic, the number of gig workers—a broad coalition that includes delivery and ride-share drivers as well as contract-based knowledge workers—was growing quickly. The number of such workers jumped by 15% in the decade through 2019, and 16% of workers at U.S. businesses were independent contractors in 2019.”
Gig Workers Can Benefit from NUSI's Retirement Benefits
The “gig economy” refers to the group of companies that embrace, support, or otherwise benefit from a workforce where independent consultants, contractors, and temporary or on-call workers are empowered to create their own freelance businesses by leveraging recent developments in technology.
Looking at the Gig Economy, 37% are millennials, 28% are generation X’ers, and 35% are baby boomers. The workforce share of gig work has increased to 15.8% in 2015 from 10.1% in 2010, and it will likely continue to grow. The Gig Economy covers industries like finance, agriculture, forestry, transportation, education, healthcare, retail, construction, and more.
NUSI is a practical retirement tool for all of those demographics.
“Moreover, self-employed workers won’t receive employer-provided matching contributions, nor will they be able to take advantage of creature comforts that participants in company-provided 401(k) plans enjoy, such as automatic enrollment and automatic rebalancing,” notes Benz.
The Nationwide Risk-Managed Income ETF uses an options trading strategy called a protective net-credit collar to generate income. The options strategy sells an upside call option and uses a portion of the proceeds received to buy a put option to hedge downside risk on an underlying portfolio of securities.
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.
For more on income strategies, visit our Retirement Income Channel.