With stocks in rally mode, many investors may not be thinking about safe-haven assets, but perhaps they should and the Nationwide Risk-Managed Income ETF (NUSI) checks that box.
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.
“How you allocate your assets, diversify your portfolio, and manage your risks can sometimes be more important than the assets you choose (safe haven or not). Safe investment practices can help you convert an inherently risky endeavor into a smart and relatively safer opportunity,” according to The Ticker Tape.
However, many “safe” strategies leaving investors short on income, but that’s not an issue with NUSI. 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 Is Safe And Rewarding
NUSI 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 covered call refers to an options strategy where an investor writes or sells a call option on an asset which they already own or buy on a share-for-share basis to generate income via premiums derived from the sale of the call options.
For investors willing to accept more risk, NUSI is also a superior alternative to cash investments, which have paltry yields and likely won’t keep up with inflation over time.
“If you check any inflation calculator, you’ll see how the purchasing power of cash generally erodes over time. That’s a loss. It’s barely perceptible but ever-present and perpetual. Plus, with cash under the mattress and not in the market, you might rob yourself of the opportunity to generate potentially strong growth once the next bull cycle begins. Cash may be relatively safe, but it’s by no means risk-free. Cash has buying power, but unless you put it to use in pursuit of growth, you can’t really call it an investment,” according to The Ticker Tape.