Firming Up Retirement Portfolios With NUSI
A primary goal of retirement portfolios is ensuring the retiree has enough, or better yet, more income than needed in their golden years. The Nationwide Risk-Managed Income ETF (NYSEArca: NUSI) is an exchange traded fund that helps with that objective.
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.
“The retirement equation isn't unsolvable, but it's not a precise calculation, either. You'll need to revisit your retirement formula once or twice a year to make sure it's on track, and be prepared to make adjustments if it isn't,” according to AARP.
NUSI Retirement Relevancy
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.
“The rule of thumb is that you'll need about 80 percent of your pre-retirement income when you leave your job, although that rule requires a pretty flexible thumb. The 80 percent rule comes from the fact that you will no longer be paying payroll taxes toward Social Security (although you may have to pay some taxes on your Social Security benefits), and you won't be shoveling money into your 401(k) or other savings plan,” notes AARP.
Covered call strategies can potentially augment a portfolio during periods of heightened volatility. The covered-call options allow an investor to hold a long position in an asset while simultaneously writing, or selling, call options on the same asset.
Conservative investors looking for added yield, dependable income and downside protection, which NUSI offers, are apt to find the Nationwide ETF to be an attractive addition to income-starved portfolios.
“Most people don't keep 100 percent of their retirement savings in a single investment, however. While they might have part of their portfolio in stocks for growth of capital, they often have part in bonds to cushion the inevitable declines in stocks,” reports AARP.
Those are issues NUSI solves for,
For more on income strategies, visit our Retirement Income Channel.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.