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Generate Income and Protect Against Inflation With NUSI

After years of relatively low inflation and high market returns, inflation is now a growing concern among investors saving for retirement. Both experts and retirees believe that at least modest inflation is here to stay. A recent survey by Global Atlantic Financial Group revealed that 61% of retirement-age investors believe that low-interest rates and rising inflation will make it more difficult to create an income stream that will last for their entire retirement.

Meanwhile, Morningstar’s director of personal finance, Christine Benz, recently wrote that retirees might have to be more conservative with their in-retirement withdrawals than previously estimated to ensure that a spike in inflation won’t jeopardize their portfolio’s ability to last over their retirement time horizon. U.S. News & World Report quotes certified financial planner and managing partner at Evans May Wealth Brooke May as saying: “We do think modest inflation is here for a prolonged period.”

Investors looking to generate income while protecting their portfolios against inflation may want to consider the Nationwide Risk-Managed Income ETF (NYSEArca: NUSI). The actively managed NUSI is an income-generating play on the Nasdaq-100 Index (ticker: NDX), a benchmark of the 100 largest, highest-volume U.S companies listed on the Nasdaq stock exchange.

NUSI employs two options strategies: selling covered calls and buying protective puts. A covered call, also known as “buy-write,” is an options transaction in which an investor sells options contracts equivalent to the amount of the underlying security that they own. For example, an investor looking to generate income from a 500-share position in a specific company could sell up to five calls since each options contract represents 100 shares of the underlying security. Covered calls are income-generating tools that can be important for investors looking to guard portfolios against income erosion caused by inflation.

In addition, NUSI seeks to provide a measure of downside protection using protective puts. This options strategy involves purchasing long puts on an underlying asset in which the investor holds a long position; in this case, NDX. This is a strategy commonly used by traders looking to hold long positions in a particular asset while seeking to mitigate against possible downside in that security.

For more news, information, and strategy, visit our Retirement Income Channel.


This article was prepared as part of Nationwide’s paid sponsorship of ETF Trends.

ETFs, hedge funds, equities, bonds, and other asset classes have different risk profiles, which should be considered when investing. All investments contain risk and may lose value. Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. The Fund’s return may not match or achieve a high degree of correlation with the return of the underlying index.

The NUSI Prospectus may be accessed at: https://nationwidefunds.onlineprospectus.net/nationwidefunds/NUSI/index.html

Call 800-617-0004 to request a summary prospectus and/or a prospectus, or download prospectuses at etf.nationwidefinancial.com. These prospectuses outline investment objectives, risks, fees, charges and expenses, and other information that you should read and consider carefully before investing.

KEY RISKS: The Fund is subject to the risks of investing in equity securities, including tracking stock (a class of common stock that “tracks” the performance of a unit or division within a larger company). A tracking stock’s value may decline even if the larger company’s stock increases in value. The Fund is subject to the risks of investing in foreign securities (currency fluctuations, political risks, differences in accounting and limited availability of information, all of which are magnified in emerging markets). The Fund may invest in more-aggressive investments such as derivatives (which create investment leverage and illiquidity and are highly volatile). The Fund employs a collared options strategy (using call and put options is speculative and can lead to losses because of adverse movements in the price or value of the reference asset). The success of the Fund’s investment strategy may depend on the effectiveness of the subadviser’s quantitative tools for screening securities and on data provided by third parties.

The Fund expects to invest a portion of its assets to replicate the holdings of an index. Correlation between Fund performance and index performance may be affected by Fund expenses and because the Fund may not be invested fully in the securities of the index or may hold securities not included in the index. The Fund frequently may buy and sell portfolio securities and other assets to rebalance its exposure to various market sectors. Higher portfolio turnover may result in higher levels of transaction costs paid by the Fund and greater tax liabilities for shareholders. The Fund may concentrate on specific sectors or industries, subjecting it to greater volatility than that of other ETFs. The Fund may hold large positions in a small number of securities, and an increase or decrease in the value of such securities may have a disproportionate impact on the Fund’s value and total return. Although the Fund intends to invest in a variety of securities and instruments, the Fund will be considered nondiversified. Additional Fund risk includes: Collared options strategy risk, correlation risk, derivatives risk, foreign investment risk, and industry concentration risk.

Nasdaq-100® Index: A rules-based, market capitalization-weighted index of the 100 largest, most actively traded U.S companies listed on the Nasdaq stock exchange. The Index includes companies from various industries except for the financial industry, like commercial and investment banks. These non-financial sectors include retail, biotechnology, industrial, technology, health care, and others.

Nasdaq® and the Nasdaq-100® are registered trademarks of Nasdaq, Inc. (which with its affiliates is referred to as the “Corporations”) and are licensed for use by Nationwide Fund Advisors. The Nationwide Nasdaq-100® Risk-Managed Income ETF (“NUSI”) has not been passed on by the Corporations as to their legality or suitability. NUSI is not issued, endorsed, sold, or promoted by the Corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE PRODUCT.

Covered Call – A financial market transaction in which the seller of call options owns the corresponding amount of the underlying instrument, such as shares of a stock or other securities.

Protective Put: A risk-management strategy using options contracts that investors employ to guard against the loss of owning a stock or asset.

Nationwide Fund Advisors (NFA) is the registered investment advisor to Nationwide ETFs, which are distributed by Quasar Distributors LLC. NFA is not affiliated with any distributor, subadviser, or index provider contracted by NFA for the Nationwide ETFs.

Nationwide, the Nationwide N and Eagle and Nationwide is on your side are service marks of Nationwide Mutual Insurance Company. © 2022 Nationwide.

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