The Nationwide Risk-Managed Income ETF (NUSI) remains one of the more compelling income-generating strategies for yield-hungry investors. That’s even more true when factoring dividend equity risk and low Treasury yields.
Specifically, the ETF will try to achieve high monthly income generation, portfolio volatility reduction, reduced duration risk, and interest rate sensitivity, capital appreciation from equity participation, downside risk mitigation and enhanced tax efficiency of index options
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.
NUSI Makes It Easy
One of the primary benefits of NUSI is it takes a relatively sophisticated strategy and makes it simple for investors.
“Many Wall Street professionals believe that selling options is beyond the scope of most individual investors. Not only are options complicated derivative contracts, the act of selling them at the appropriate price and in the correct volume is time-consuming and fraught with potential pitfall,” reports The Wall Street Journal.
NUSI aims for high monthly income generation, portfolio volatility reduction, reduced duration risk, and interest rate sensitivity, capital appreciation from equity participation, downside risk mitigation and enhanced tax efficiency of index options.
“Covered calls are an old investing methodology, but one that does not get much attention. That said, employing covered calls can be a great income strategy,” according to Nasdaq. “So what is a covered call? Simply put, it is the process of selling call options while simultaneously holding the underlying shares.”
The Nationwide Risk-Managed Income ETF incorporates options exposure to help generate income and mitigate risk as a way to enhance total returns. Investors have long capitalized on covered call options strategies for income generation or protective put options strategies to protect against and limit losses.
As volatility rises, so too does the size of the premium that can be generated by writing a call option. NUSI presents a single solution for investors looking to incorporate a small cap covered call strategy, who may otherwise need to accept significant time and expense to operate this strategy individually.