New Fund designed to help generate income in current low interest rate environment
January 27, 2020
COLUMBUS, Ohio, Jan. 27, 2020 /PRNewswire/ — Nationwide has launched the Nationwide Risk-Managed Income ETF (NUSI), 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.
“The persistent low interest rate environment has made it exceedingly more difficult for investors to generate reliable streams of income without taking on additional risk,” said Michael Spangler, senior vice president of Nationwide Financial. “The Nationwide Risk-Managed Income ETF adds to Nationwide’s differentiated lineup of solutions that seeks to deliver better investor outcomes, while managing the short- and long-term risks inherent to retirement planning, with a targeted focus on income generation.”
The Fund generates investment income using an options trading strategy called a protective net-credit collar, which is established by selling an upside call option and using a portion of the proceeds received to buy a put option that hedges the downside risk on an underlying portfolio of securities.
The Fund will be subadvised by Harvest Volatility Management, an experienced derivative asset management firm with decades of expertise advising, structuring, and managing option related strategies. Founded in 2008, HVM manages more than $4.5 billion in assets (as of 12/31/19), with a principal focus on the delivery of yield enhancement, risk reduction, and absolute return solutions.
The portfolio management team for the Fund is comprised of Jonathan Molchan, executive director and lead portfolio manager, Troy Cates, executive director and portfolio manager, and Garrett Paolella, chief operating officer – investment professionals who collectively have decades of experience developing and managing equity and options-based strategies within various investment vehicles, including ETFs, closed-end funds, and separately managed accounts, respectively.
“We are very excited to have partnered with Nationwide to bring this investment option to the market,” said Jonathan Molchan. “Given current market conditions, we believe NUSI offers a timely strategy that will help investors meet their income needs in a low yield environment. The Fund follows a systematic, risk-managed approach that seeks to provide capital appreciation via US equity exposure.”
Fundamentally designed with income-generation in mind, the Nationwide Risk-Managed Income ETF potentially offers a number of benefits that may address the yield enhancement and volatility management needs of investors, including:
- High monthly income generation
- Portfolio volatility reduction
- Reduced duration risk and interest rate sensitivity
- Capital appreciation from equity participation
- Downside risk mitigation
- Enhanced tax efficiency of index options
The Fund is listed on the New York Stock Exchange and has an expense ratio of 0.68%.
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