The Nationwide Risk-Managed Income ETF (NUSI) provides steady, unique income benefits that retirees can tap to bolster 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.
In fact, NUSI can be used to augment Social Security riddles and income,
“The earlier clients decide to file, the lower the benefit amount since that benefit amount will be paid out for a longer period of time,” reports Roy Snarr for ThinkAdvisor. “If a client files at 62 and has a life expectancy of 82, that is 20 years that the Social Security Administration will probably provide income payments for the client.”
NUSI as an Income Supplement
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.
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.
With a distribution yield of 7.81%, NUSI is an ideal strategy for today’s low-yield environment and one that doesn’t carry many of the risks associated with high-yield investments.