With the Nasdaq-100 Index back near all-time highs, its dividend yield is falling. Investors looking to maintain exposure to popular equity benchmark while bolstering their income profiles ought to consider the Nationwide Risk-Managed Income ETF (NUSI).
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.
NUSI allows investors to embrace some familiar tech and internet stocks with an added income stream at a time when the Nasdaq-100 is highlighting “the sturdiness of the technology sector and investors’ enthusiasm for stocks such as Microsoft ( MSFT), Apple ( AAPL) and Amazon ( AMZN),” reports InvestorPlace.
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.
NUSI avoids some of the current dividend risks with the S&P 500 because the Nationwide ETF is an income-generating spin on the Nasdaq-100 Index (NDX), an index lightly allocated dividend-offending sectors, such as energy and real estate.
To the point, NDX has no energy exposure and it allocates just 2.22% of its weight to the industrial sector. Yes, the index allocates over 16% of its weight to consumer discretionary stocks, but over 11% goes to Amazon and Tesla – stocks that aren’t dividend payers in the first place so they can’t qualify to be payout offenders.
Moreover, NUSI isn’t just an ideal long-term investment because of its monthly dividends. It works for longer-term investors for others reasons.
“For its part, the Nasdaq-100 Index, QQQ’s underlying benchmark, has a lengthy history of topping the S&P 500 — often by wide margins. That’s happening again this year and it’s probable that as tech supports the market, more investors will flock to,” according to InvestorPlace.