Traditional retirement techniques don’t cut it for all investors. The Nationwide Risk-Managed Income ETF (NYSEArca: NUSI) offers a modern approach to bolstering retirement income. 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.
“Improving the Measurement of Retirement Income of the Aged Population,” – a retirement white paper published this month by Irena Dushi and Brad Trenkamp addresses the need for more refined retirement metrics.
“They use data from the U.S. Census’ 2016 Current Population Survey (CPS) Annual Social and Economic Supplement (ASEC), IRS tax records and Social Security earnings and benefit records to examine whether and to what extent their data improves income estimates, and compare those estimates with public-use data from the University of Michigan’s 2016 Health and Retirement Study (HRS),” according to the American Society of Pension Professionals & Actuaries (ASPPA).
Where Does NUSI Fit In?
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.
“Dushi and Trenkamp note that they are not alone, writing that other researchers also have criticized the CPS and have emphasized that the CPS inadequately measures income from assets and retirement accounts such as 401(k)s and IRAs, and that the result is understating their importance and overstating the importance of Social Security,” according to ASPPA.
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.
For more on income strategies, visit our Retirement ETF Channel.