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At-a-glance
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Overview
Seeks to generate attractive risk-adjusted returns within the liquid, broadly syndicated loan market by focusing on downside risk mitigation and proactive management of credit risk, while intentionally allocating at least 85% of capital to a higher standard for ESG and transparency factors based on the team’s proprietary ESG framework. Carry is expected to be main driver of return however opportunistic use of catalyst driven investments may result in additional total return.
Strategy highlights
- Active approach: downside risk mitigation and proactive management of credit risk to uncover total-return opportunities within liquid issuers.
- Bottom-up: fundamental company research along with relative value analysis informs issue selection and position sizing.
- Top-down: sector and quality rotation informed by top-down insights.
- Proprietary ESG scoring and transparency rating framework are fully integrated into the research process.
- Carry is expected to be main driver of return with tactical investment in total return opportunities.
Risks associated with environmental, social and governance (ESG) are credit risks. Systemically producing and integrating proprietary ESG scores and transparency ratings within the fundamental credit underwriting process can identify potential risks and target opportunities to engage with issuers.
FOCUS ON LIQUIDITY
Liquidity remains critical to achieve our two main objectives: 1) Proactively managing downside risk in credits where we expect negative catalysts and 2) Executing upon idea generation where we expect positive catalysts resulting in attractive total return potential.
HIGHLY SELECTIVE
Rigorous bottom-up, fundamental analysis that seeks to identify stable or improving credits to minimize default potential and maximize total return. Proprietary ESG and transparency assessments are fully integrated within the research process through a systematic framework focused on materiality.
ACTIVE MANAGEMENT
Our team’s philosophy and approach to delivering positive outcomes for our clients centers on our belief that active management of both risks and opportunities requires continuous evaluation of top down macroeconomic factors as well as daily re-underwriting of relative value and fundamental credit risk – including ESG factors.
Portfolio management team
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1Nuveen Leveraged Finance internal rating. ESG score is a on scale of 1-5, 5 being the best and 1 being the worst, transparency rating is on a scale of A-F, A being the best and F being the worst.
Important information on risk
Past performance is no guarantee of future results. All investments carry a certain degree of risk, including the loss of principal, and there is no assurance that an investment will provide positive performance over any period of time. Investment objectives may not be met. Derivative instruments for hedging purposes or as part of the investment strategy may involve risks such as liquidity risk, interest rate risk, market risk, credit risk, or management risk. There is no guarantee that the use of these instruments will succeed in mitigating volatility and interest rate risk. Any investment in collateralized loan obligations or other structured vehicles involves significant risks not associated with more conventional investment alternatives.
Credit risk may be heightened for the portfolios that invest a substantial portion of their assets in "high yield" debt or loans with low credit ratings. These securities, while generally offering higher yields than investment-grade debt with similar maturities, involve greater risks, including the possibility of interest deferral, default or bankruptcy, and are regarded as predominantly speculative with respect to the issuer's capacity to pay dividends or interest and repay principal.
The London Interbank Offered Rate or LIBOR, is used throughout global banking and financial industries to determine interest rates for a variety of financial instruments (such as debt instruments and derivatives) and borrowing arrangements. The United Kingdom’s Financial Conduct Authority has undertaken a multi-year phase out of LIBOR. As a result, the administrator of LIBOR ceased publishing certain LIBOR settings after December 31, 2021 and expects to cease publication of all settings after June 30, 2023. The transition away from LIBOR may involve, among other things, increased volatility or illiquidity in markets for instruments that currently rely on LIBOR, such as floating-rate debt obligations. Libor risk is assessed quarterly in arrears.
Issuers of high yield securities may be highly leveraged and may have fewer methods of financing available. The prices of these lower grade securities are typically more sensitive to negative developments, such as a decline in the issuer's revenues or a general economic downturn, than are the prices of higher grade securities. The secondary market for high yield securities may not be as liquid as the secondary market for more highly rated securities, a factor which may have an adverse effect on a portfolio's ability to dispose of a particular security. There are fewer dealers in the market for high yield securities than for investment grade obligations. The prices quoted by different dealers may vary significantly and the spread between the bid and ask price is generally much larger than for higher quality instruments. Under adverse market or economic conditions, the secondary market for high yield securities could contract further, independent of any specific adverse changes in the condition of a particular issuer, and these instruments may become illiquid. As a result, a portfolio could find it more difficult to sell these securities or may be able to sell the securities only at prices lower than if such securities were widely traded.
Nuveen, LLC provides investment solutions through its investment specialists, including Nuveen Asset Management, LLC.
Responsible investing incorporates Environmental Social Governance (ESG) factors that may affect exposure to issuers, sectors, industries, limiting the type and number of investment opportunities available, which could result in excluding investments that perform well.
ESG integration incorporates financially relevant ESG factors into investment research in support of portfolio management for actively managed strategies. Financial relevancy of ESG factors varies by asset class and investment strategy. Applicability of ESG factors may differ across investment strategies. ESG factors are among many factors considered in evaluating an investment decision, and unless otherwise stated in the relevant offering memorandum or prospectus, do not alter the investment guidelines, strategy or objectives.
Important information on risk
Past performance is no guarantee of future results. All investments carry a certain degree of risk, including the loss of principal, and there is no assurance that an investment will provide positive performance over any period of time. Investment objectives may not be met. Derivative instruments for hedging purposes or as part of the investment strategy may involve risks such as liquidity risk, interest rate risk, market risk, credit risk, or management risk. There is no guarantee that the use of these instruments will succeed in mitigating volatility and interest rate risk. Any investment in collateralized loan obligations or other structured vehicles involves significant risks not associated with more conventional investment alternatives.
Credit risk may be heightened for the portfolios that invest a substantial portion of their assets in "high yield" debt or loans with low credit ratings. These securities, while generally offering higher yields than investment-grade debt with similar maturities, involve greater risks, including the possibility of interest deferral, default or bankruptcy, and are regarded as predominantly speculative with respect to the issuer's capacity to pay dividends or interest and repay principal.
The London Interbank Offered Rate or LIBOR, is used throughout global banking and financial industries to determine interest rates for a variety of financial instruments (such as debt instruments and derivatives) and borrowing arrangements. The United Kingdom’s Financial Conduct Authority has undertaken a multi-year phase out of LIBOR. As a result, the administrator of LIBOR ceased publishing certain LIBOR settings after December 31, 2021 and expects to cease publication of all settings after June 30, 2023. The transition away from LIBOR may involve, among other things, increased volatility or illiquidity in markets for instruments that currently rely on LIBOR, such as floating-rate debt obligations. Libor risk is assessed quarterly in arrears.
Issuers of high yield securities may be highly leveraged and may have fewer methods of financing available. The prices of these lower grade securities are typically more sensitive to negative developments, such as a decline in the issuer's revenues or a general economic downturn, than are the prices of higher grade securities. The secondary market for high yield securities may not be as liquid as the secondary market for more highly rated securities, a factor which may have an adverse effect on a portfolio's ability to dispose of a particular security. There are fewer dealers in the market for high yield securities than for investment grade obligations. The prices quoted by different dealers may vary significantly and the spread between the bid and ask price is generally much larger than for higher quality instruments. Under adverse market or economic conditions, the secondary market for high yield securities could contract further, independent of any specific adverse changes in the condition of a particular issuer, and these instruments may become illiquid. As a result, a portfolio could find it more difficult to sell these securities or may be able to sell the securities only at prices lower than if such securities were widely traded.
Nuveen, LLC provides investment solutions through its investment specialists, including Nuveen Asset Management, LLC.
Responsible investing incorporates Environmental Social Governance (ESG) factors that may affect exposure to issuers, sectors, industries, limiting the type and number of investment opportunities available, which could result in excluding investments that perform well.
ESG integration incorporates financially relevant ESG factors into investment research in support of portfolio management for actively managed strategies. Financial relevancy of ESG factors varies by asset class and investment strategy. Applicability of ESG factors may differ across investment strategies. ESG factors are among many factors considered in evaluating an investment decision, and unless otherwise stated in the relevant offering memorandum or prospectus, do not alter the investment guidelines, strategy or objectives.
