Investors looking to bolster retirement savings should look beyond traditional vehicles, particularly in this low-yield environment. The Nationwide Risk-Managed Income ETF (NUSI) can complement bonds and equities while significantly bolstering income streams.
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.
“Most retirement planners agree that you’ll need about 80% of your pre-retirement income to sustain the same quality of life after retirement. A 6% savings rate isn’t likely to get you there,” according to the Greensboro News & Record.
While the markets continue to process the impact of Covid-19, time doesn’t stop for advisors focused on retirement planning. Fixed-income investors may need to turn to alternative strategies that can better manage downside risk, while still generating the income investors need in retirement. But how can you generate additional yield without taking an outsized risk? NUSI answers that question.
A Sturdier Nest Egg
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.
NUSI can also serve as an alternative to cash investments that hardly worth investors’ trouble in the current climate.
“One common mistake is setting aside money for retirement in a savings account or CD. While it’s technically possible to get a seven-figure retirement account by keeping money in cash, the majority of people who retire with a large nest egg get there by investing,” reports Greensboro News & Record.
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.
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.