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Income Redefined: Positioning Your Portfolio for the “Known Unknowns”

Max Chen
·2 min read

This article was originally published on ETFTrends.com.

The Fed’s reinforcement of a lower-for-longer yield environment has added to investor apprehension about the outlook for income generation. Covid-19 and uncertainty surrounding the outcome of the election has further led to trepidation about staying invested, with economic signs increasingly pointing towards defense.

In the upcoming webcast, Income Redefined: Positioning Your Portfolio for the “Known Unknowns”, Mark Hackett, Chief of Investment Research, Nationwide; Efram Slen, Head of Research, Global Indexes, Nasdaq; and Jonathan Molchan, Managing Director and Portfolio Manager, Harvest Volatility Management, will explore strategies for managing risk, while generating income from some of the most innovative companies in the market today.

For example, the Nationwide Risk-Managed Income ETF (NYSEArca: NUSI) can help investors target high current income with less risk relative to traditional income-focused investments. The fund strategy seeks to provide some downside protection while maintaining upside potential. Harvest Volatility Management sub-advises the fund.

The Nationwide Risk-Managed Income ETF 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 bought on a share-for-share basis to generate income via premiums derived from the sale of the call options.

A protective put is an options strategy where an investor purchases a put option on an asset which they already own or bought on a share-for-share basis to limit potential losses. The protective put will cause profits derived from the strategy to be reduced by the premium paid for the put, but it limits the maximum potential losses.

The ETF will try to achieve high monthly income generation, portfolio volatility reduction, reduced duration risk, and interest rate sensitivity, capital appreciation from equity participation, downside risk mitigation and enhanced tax efficiency of index options.

Financial advisors who are interested in learning more about managing risk can register for the Tuesday, October 27 webcast here.

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