NUSI

Nationwide Risk-Managed Income ETF

A New Approach to Income Generation

Designed with income-generation in mind, NUSI potentially offers a number of benefits that may address the yield enhancement and volatility management needs of investors.

NUSI Seeks to Deliver:

Monthly Income

Downside Risk Mitigation

Capital Appreciation

NUSI

The Nationwide Risk-Managed Income ETF (NUSI) is an income solution that targets high current income with less risk relative to traditional income-focused investments. The Fund seeks to provide investors with a measure of downside protection with potential upside participation.

Monthly Distribution Information (As of 8/31/20)*
Ex-date
NAV
Distribution
Yield
1
Monthly
Distribution
(%/share)
Monthly
Distribution

($/share)
30-Day
SEC Yield
$28.14 7.75% 0.65% $0.18363 0.12%
For standardized performance, click here

Investment Strategy Overview

Managed by Harvest Volatility Management, an experienced derivative asset management firm, the strategy offers an innovative approach to traditional income investing by employing a dynamic, risk-managed, net credit collar.

Purchase all underlying stocks in the Nasdaq-100 Index.

Deploys a rules-based options collar strategy.

Monthly distributions are paid to investors using a portion of the premium generated by the call option.

Additional premium may be used to reinvest in the underlying portfolio of Nasdaq-100 stocks.

Income from net realized capital gains, if any, are distributed annually.

How the NUSI strategy is intended to perform

The protective net-credit collar strategy used by NUSI can be expected to work best during periods of high stock market volatility. Premiums for call options tend to increase when stock prices turn volatile, so the income (net-credit) these premiums generate can be returned to investors in the form of consistent dividends.

In a rising market:

In a rising stock market, total return for NUSI will likely come from capital appreciation of the underlying stock portfolio. Income is typically generated by the appreciated stock portfolio as well as dividends received from the Fund’s equity positions. The covered call options used as part of the net-credit collar strategy may limit upside growth potential, but the Fund managers have the discretion to close out certain call options as a means of minimizing potential losses.

In a declining market:

In a down-trending stock market, NUSI is designed to seek higher total return than other covered call strategies as well as the broad equity market. The higher premiums generated by the covered calls provide income to fund investors, while the protective puts help preserve portfolio values.

In a sideways market:

In a sideways market during which the equity benchmark remains relatively static, the sale of the call option may aid in supporting the generation of premium which the investor retains. Additionally, the constant hedge continues to protect against potential losses in the equity portfolio, with the retention of the underlying equity holdings allowing for future appreciation.

Where NUSI potentially fits in a portfolio

The Nationwide Risk Managed Income ETF is designed for income-focused investors seeking to lower their exposure to market volatility and minimize the potential for losses during down markets. NUSI can be used to enhance and diversify core income-oriented portfolio allocations in the following ways:

  • As a supplement to current income strategies during cycles of low or falling yields.
  • As a less volatile strategy for maintaining equity exposure during volatile market periods, where the protective put options offer a degree of downside protection.
  • As a strategy for managing the risk of rising interest rates and the possibility of economic recession as an alternative to a traditional bond investment.
  • As a complement to a traditional 60% equity/40% bond portfolio, potentially enhancing the yield generated by the bond allocation while reducing potential volatility of the equity allocation.

Interested in more information about NUSI? Let us know how we can help: