At-a-glance
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Overview
Seeks to generate attractive risk-adjusted return within the liquid, broadly syndicated loan market by focusing on downside risk mitigation and proactive management of credit risk. Carry is expected to be main driver of return however opportunistic use of catalyst driven investments may result in additional total return.
Strategy highlights
- Risk-adjusted return focused: Income is expected to be main driver of return, however opportunistic use of catalyst driven investments has resulted in additional total return.
- Research driven: In depth, bottom-up fundamental company research along with relative value analysis informs issue selection and position sizings.
- Diversification potential: Senior loans can provide diversification benefits to broad portfolios due to their lower correlation to duration sensitive assets.
Our team focuses across below investment grade credit investing through an array of security types from long-only senior loans and high yield, to CLOs, structured credit and hedge funds. We are looking up and down a company's capital structure and aiming to produce relative value opportunities on the long and short side, which allows us, I believe, to be predictive around companies that may experience downside volatility.
FOCUS ON LIQUIDITY
ACTIVE MANAGEMENT
HIGHLY SELECTIVE
Portfolio management team
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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.
