Nationwide has launched three new ETFs that aim to provide high current income and downside protection during falling markets and the potential for upside participation in rising markets. The Nationwide S&P 500 Risk-Managed ETF (NSPI), the Nationwide Dow Jones Risk-Managed Income ETF (NDJI), and the Nationwide Russell 2000 Risk-Managed Income ETF (NTKI) will offer investors the opportunity for a more tactical approach to investing depending on the exposure of each individual index.
The Nationwide S&P 500 Risk-Managed ETF (NSPI) is an actively managed fund that invests in a portfolio of securities included in the S&P 500 Index. The S&P 500 Index is weighted by market capitalization and comprises approximately 500 of the top U.S.-listed companies that make up the majority of the U.S. equity market cap (80%). The index currently has significant exposure to the information technology sector as of October 29, 2021, per the prospectus.
NSPI also uses an options collar strategy intended to reduce the fund’s volatility while also seeking to provide some downside protection. A collar strategy involves holding shares of the underlying asset while simultaneously buying protective put options and writing calls for the same security. A put option provides the owner the right to sell the underlying asset at a specific price and on a specific date but does not obligate them to do so. A call option provides its owner the right to buy the asset but does not obligate them to do so.
NSPI generally utilizes a “replication” strategy when investing in the S&P 500, which means that it will invest in all of the component securities of the S&P 500 in a way that generally approximates the proportions of the S&P 500. The fund can, however, utilize a “representative sampling” strategy in which it invests in a sample of securities within the S&P 500 that have a risk, return, and other characteristics that closely mirror those of the index, at the discretion of the sub-advisor and when it is believed to be in the best interest of the fund.
NSPI seeks high levels of monthly income generated from both the dividends received from equity holdings and premiums from the options collar. The fund offers a tactical investment opportunity for investors who may believe that value is due for a comeback and seek exposure to the S&P 500. The fund carries an expense ratio of 0.68%.
The Nationwide Dow Jones Risk-Managed Income ETF (NDJI) is an actively managed fund that invests in a portfolio of securities included in the Dow Jones Industrial Average. The Dow Jones is weighted by price and comprises 30 well-established U.S. companies, referred to as blue-chip companies. Per the prospectus, as of October 29, 2021, the Dow Jones had significant exposure to the information technology, healthcare, and financial sectors.
NDJI utilizes an options collar strategy as well to seek to reduce the volatility of the fund and provide some downside protection. It also generally uses a “replication” strategy when investing in the Dow Jones but will switch to a “representative sampling” at the discretion of the sub-advisor and when it is believed to be in the fund’s best interest.
NDJI seeks high levels of monthly income generated from both the dividends received from equity holdings and premiums from the options collar. The fund offers a tactical investment opportunity for investors who may believe that infrastructure is due to experience a supercycle and seek exposure to the Dow Jones. The fund carries an expense ratio of 0.68%.
The Nationwide Russell 2000 Risk-Managed Income ETF (NTKI) is an actively managed fund that invests in a portfolio of securities included in the Russell 2000 Index. The Russell 2000 tracks approximately 2,000 U.S. small-cap companies, measuring their performance, and, as of October 29, 2021, had significant exposure to the healthcare sector, per the prospectus.
NTKI utilizes an options collar strategy as well to seek to reduce the volatility of the fund and provide some downside protection. It also generally uses a “replication” strategy when investing in the Russell 2000 but will switch to a “representative sampling” at the discretion of the sub-advisor and when it is believed to be in the fund’s best interest.
NTKI seeks high monthly income levels generated from both the dividends received from equity holdings and premiums from the options collar. The fund offers a tactical investment opportunity for investors seeking large upside growth potential by gaining exposure to small-caps via the Russell 2000. The fund carries an expense ratio of 0.68%.
The three new ETFs join the existing Nationwide Nasdaq-100 Risk Managed Income ETF (NUSI), which also targets high current income with a measure of downside risk protection. The distribution yield for NUSI as of September 30, 2021, was 7.80%. (Click this link to see the fact sheet that has standardized performance and 30-day SEC yield.)
The results shown represent past performance; past performance does not guarantee future results. Current performance may be lower or higher than the past performance shown, which does not guarantee future results. Share price, principal value, and return will vary, and you may have a gain or a loss when you sell your shares. To obtain the most recent month-end performance, go to etf.nationwide.com or call 800-617-0004.
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
The NSPI Prospectus may be accessed at: http://nationwidefunds.onlineprospectus.net/nationwidefunds/NSPI/index.php
The NDJI Prospectus may be accessed at: http://nationwidefunds.onlineprospectus.net/nationwidefunds/NDJI/index.php
The NTKI Prospectus may be accessed at: http://nationwidefunds.onlineprospectus.net/nationwidefunds/NTKI/index.php
Call 1-800-617-0004 to request a summary prospectus and/or a prospectus. You may also download the prospectus at the link above or by visiting etf.nationwide.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 Nationwide Risk-Managed Income ETFs are 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 Funds are 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 Funds may invest in more-aggressive investments such as derivatives (which create investment leverage and illiquidity and are highly volatile). The Funds employ 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 Funds’ investment strategy may depend on the effectiveness of the subadviser’s quantitative tools for screening securities and on data provided by third parties.
The Funds expect to invest a portion of their assets to replicate the holdings of an index. Correlation between Fund performance and index performance may be affected by Fund expenses and because the Funds may not be invested fully in the securities of the index or may hold securities not included in the index. The Funds 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 Funds and greater tax liabilities for shareholders. The Funds may concentrate on specific sectors or industries, subjecting it to greater volatility than that of other ETFs. The Funds 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 Funds intend to invest in a variety of securities and instruments, the Funds 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: An unmanaged, market capitalization-weighted index of equity securities issued by 100 of the largest non-financial companies, with certain rules capping the influence of the largest components. It is based on exchange, and it is not an index of U.S.-based companies. Market index performance is provided by a third-party source Nationwide Funds Group deems to be reliable (Morningstar). Indexes are unmanaged and have been provided for comparison purposes only. No fees or expenses have been reflected. Individuals cannot invest directly in an index.
S&P 500® Index: An unmanaged, market capitalization-weighted index of 500 stocks of leading large-cap U.S. companies in leading industries; gives a broad look at the U.S. equities market and those companies’ stock price performance.
The S&P 500® index is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”), and has been licensed for use by Nationwide Fund Advisors. Standard & Poor’s®, S&P®, and S&P 500® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Nationwide Fund Advisors. The Fund is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500® Index.
Market index performance is provided by a third-party source Nationwide Fund Advisors deems to be reliable (Morningstar or MSCI). Indexes are unmanaged and have been provided for comparison purposes only. No fees or expenses have been reflected. Individuals cannot invest directly in an index.
Dow Jones Industrial Average®: A price-weighted index composed of 30 “blue-chip” U.S. stocks. The index covers all industries except transportation and utilities, respectively.
The Dow Jones Industrial Average® is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”), and has been licensed for use by Nationwide Fund Advisors. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones®, Dow Jones Industrial Average®, DJIA® and The Dow® are registered trademarks of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Nationwide Fund Advisors. The Fund is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the Dow Jones Industrial Average®.
Market index performance is provided by a third-party source Nationwide Fund Advisors deems to be reliable (Morningstar or MSCI). Indexes are unmanaged and have been provided for comparison purposes only. No fees or expenses have been reflected. Individuals cannot invest directly in an index.
Russell 2000® Index: An unmanaged index that seeks to measure the performance of the small-cap segment of the U.S. equity universe.
FTSE Russell (“Russell”) is the Index Provider for the Russell 2000® Index (“Russell 2000®” or the “Index”). Russell is not affiliated with the Fund, Nationwide Fund Advisors, the Distributor nor any of their respective affiliates. Nationwide Fund Advisors has entered into a license agreement with Russell to use the Russell 2000®.
The Fund has been developed solely by Nationwide Fund Advisors. The Fund is not in any way connected to nor sponsored, endorsed, sold or promoted by the London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). FTSE Russell is a trading name of certain of the LSE Group companies. All rights in the Russell 2000® vest in the relevant LSE Group company which owns the Index. “Russell®” is a trademark of the relevant LSE Group company and is used by any other LSE Group company under license. The Index is calculated by or on behalf of FTSE International Limited or its affiliate, agent or partner. The LSE Group does not accept any liability whatsoever to any person arising out of (a) the use of, reliance on or any error in the Index or (b) investment in or operation of the Fund. The LSE Group makes no claim, prediction, warranty nor representation either as to the results to be obtained from the Fund or the suitability of the Index for the purpose to which it is being put by Nationwide Fund Advisors.
Market index performance is provided by a third-party source Nationwide Fund Advisors deems to be reliable (Morningstar or MSCI). Indexes are unmanaged and have been provided for comparison purposes only. No fees or expenses have been reflected. Individuals cannot invest directly in an index.
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. © 2021 Nationwide.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
MFM-4466AO; Q-20211220-0235
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