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%.
Investors interested in learning more about Nationwide Funds should contact their financial professional or visit the website. Financial professionals interested in learning more about Nationwide ETFs can call 1- 877-893-1830.
Nationwide, a Fortune 100 company based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the United States. Nationwide is rated A+ by both A.M. Best and Standard & Poor's. An industry leader in driving customer-focused innovation, Nationwide provides a full range of insurance and financial services products including auto, business, homeowners, farm and life insurance; public and private sector retirement plans, annuities and mutual funds; excess & surplus, specialty and surety; pet, motorcycle and boat insurance. For more information, visit www.nationwide.com. Follow us on Facebook and Twitter.
This material is not a recommendation to buy, sell, hold or roll over any asset, adopt an investment strategy, retain a specific investment manager or use a particular account type. It does not take into account the specific investment objectives, tax and financial condition, or particular needs of any specific person. Investors should work with their financial professional to discuss their specific situation.
Call 800-617-0004 to request a summary prospectus and/or a prospectus, or download prospectuses at 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.
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.
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: An unmanaged, 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.
A call option is a financial contract that give the option buyer the right, but not the obligation, to buy a stock, bond, commodity other asset or instrument at a specified price within a specific time period.
A put option is a contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security at a pre-determined price within a specified time frame.
Duration is a measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates.
Nationwide Funds distributed by Nationwide Fund Distributors LLC (NFD), member FINRA, Columbus, OH. NFD is not affiliated with any subadviser contracted by Nationwide Fund Advisors (NFA), with the exception of Nationwide Asset Management, LLC (NWAM). Nationwide Investment Services Corporation (NISC), member FINRA.
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