Author Topic: NUSI, replace stock ETF with this?  (Read 561 times)

effigy98

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NUSI, replace stock ETF with this?
« on: December 20, 2020, 11:55:29 PM »
Thinking of replacing stock portion of golden butterfly with NUSI.

NUSI pays out a generous yield of 7%ish while having reduced drawdowns by doing collars on the NASDAQ 100. It did amazing during the drops in March (low ulcer index). It even seems very tax efficient even with the latest return being ROC instead of a distribution. The upside looks a bit capped, but the downside seems also capped and is a more then fair tradeoff. I am extremely bullish on big tech going forward as they have multiple money printing machines at their disposal, but having a CAPE above 30 also makes me believe there is still potential for downside if the government does not keep up the intervention.
« Last Edit: December 21, 2020, 01:00:25 PM by effigy98 »

MustacheAndaHalf

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Re: NUSI, replace stock ETF with this?
« Reply #1 on: December 21, 2020, 08:35:16 AM »
Looking at how they make income, and their benchmark:
"A rules-based options trading strategy that seeks to produce high income using the Nasdaq-100 Index."
"CBOE S&P 500 Zero-Cost Put Spread Collar Index (Benchmark)"
https://nationwidefinancial.com/products/investments/etfs/fund-details/NUSI

Others can chime in with a "put spread collar", but from what I read briefly online, it involves selling call options to pay for buying put options.  So the market declines in March were the ideal situation for this fund to shine.  And yet using Nasdaq-100 options, they trailed the Nasdaq by 28% (YTD).
https://etfdb.com/etf/NUSI/#performance
https://etfdb.com/etf/QQQ/#performance

My worry with this 12 month old ETF is that 2020 was it's best year.  If stocks go up most years, won't this fund be holding losing put options most years?

effigy98

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Re: NUSI, replace stock ETF with this?
« Reply #2 on: December 22, 2020, 10:42:46 PM »
33 CAPE, not worried about stocks going UP forever... The probabilities are in the favor of this fund out performing QQQ based on valuations.