Curt F. Brockelman, Jr., Managing Partner & Co-Founder, Portfolio Manager at Harvest Volatility Management, a subadviser of the Nationwide Risked-Managed Income suite of ETFs and Efram Slen, Vice President, Index Research & Development at Nasdaq Investment Intelligence discuss the Nationwide Nasdaq-100® Risk-Managed Income ETF (NUSI) and how investors can capitalize on the income-generating potential of the Nasdaq-100®.
The Nasdaq-100® Index is comprised of the largest, most innovative companies on the Nasdaq Stock Market. Often at the forefront of disruptive trends and emerging technologies, companies in the Nasdaq-100® offer investors substantial long-term growth potential, but in down-markets and periods of heightened volatility, these stocks often pose a greater risk.
The Nationwide Nasdaq-100® Risk-Managed Income ETF (NUSI) leverages a rules-based, options trading strategy, that seeks to produce high income using the Nasdaq-100® Index and hedge against market risk. Advisors can leverage NUSI in their client portfolios to potentially enhance current income, as a complement to a traditional 60/40 portfolio, as a source of alternative income, or to help reduce overall volatility.
For more insights on this topic: Extending the Innovative Power of the Nasdaq-100®: Designed to Add Income to Your Portfolio.
On one side:
- Bond investors are facing headwinds from rising inflation to the end of “easy money” Federal Reserve policy. They’re seeking alternate approaches for managing these risks while continuing to search for opportunities for yield. With the risk of higher interest rates and rising downside volatility, bonds may not offer a buffer to equity market volatility or adequate income to help yield-seeking investors. As a result of increased fixed income volatility, investors have become more nervous about their bond holdings.
On the other:
- Along with the Nasdaq-100®’s reputation for being comprised of innovative companies who have changed the world and delivered outperformance for their investors, it is also known for its volatility.
- And no wonder. While these companies have delivered long-term performance, they are often the forefront of transformative, long-term themes such as augmented reality, cloud computing, big data, mobile payments, streaming services, electric vehicles, and more. As pioneers, these companies have solid growth potential but also increased risk, especially in the short-term.
- But what if you could transform the index comprised of these 100 great companies yet again something new and of value? Just as a turbine is powered by the wind, the volatility of the Nasdaq-100® can be used to help generate income. Introducing the Nationwide Risk-Managed Income ETF (NUSI).
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 Funds’ returns may not match or achieve a high degree of correlation with the return of the respective underlying index. Diversification does not assure a profit nor protect against loss in a declining market.
Call 1-800-617-0004 to request a summary prospectus and/or a prospectus, or download prospectuses at etf.nationwidefinancial.com. These prospectuses outline investment objectives, risks, fees, charges and expenses, and other information that you should read and consider carefully before investing.
Expense ratios are as of the most recent prospectus. Please see the Fund prospectus for more detail.
KEY RISKS
The Nationwide Nasdaq-100® Risk-Managed Income ETF (“NUSI”) 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. NUSI is subject to the risks of investing in foreign securities (current fluctuations, political risks, differences in accounting and limited availability of information, all of which are magnified in emerging markets). NUSI may invest in more-aggressive investments such as derivatives (which create investment leverage and illiquidity and are highly volatile). NUSI 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 NUSI’s investment strategy may depend on the effectiveness of the subadviser’s quantitative tools for screening securities and on data provided by third parties.
NUSI 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. Frequently, NUSI 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 NUSI and greater tax liabilities for shareholders. NUSI may concentrate on specific sectors or industries, subjecting it to greater volatility than that of other ETFs. NUSI 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 NUSI intends to invest in a variety of securities and instruments, NUSI will be considered non-diversified. Additional risks include: collared options strategy risk, correlation risk, derivatives risk, foreign investment risk, industry concentration risk, and large-capitalization investing risk.
Nasdaq-100® Index: A rules-based, 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.
Nasdaq® and the Nasdaq-100® are registered trademarks of Nasdaq, Inc. (which with its affiliates is referred to as the “Corporations”) and are licensed for use by Nationwide Fund Advisors. The Nationwide Nasdaq-100® Risk-Managed Income ETF (“NUSI”) has not been passed on by the Corporations as to its legality or suitability. NUSI is not issued, endorsed, sold or promoted by the Corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE PRODUCT.
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 is not an affiliate of third-party sources. Representatives of the Nationwide ETF Sales Desk are registered with Nationwide Investment Services Corporation, member FINRA, Columbus, Ohio.
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