Taxable Income : Preferred Securities Funds

About Preferred Securities

Taxable preferred securities are usually junior liabilities of an issuer, pay fixed or adjustable rate dividends, have a "preference" over common stock in the payment of dividends and the liquidation of a company's assets, and may be issued for a finite term. They are not bonds but often have bond-like characteristics like credit ratings and call features.

Generally, taxable preferred securities are divided into "$25 par (sometime also known as hybrid prefered) and "institutional" segments. The $25 par segment is typified by securities that are listed on the New York Stock Exchange and trade without accrued dividend income. The institutional segment is typified by $1,000 par value securities that are traded over-the-counter on an "accrued income" basis.

Priority of Claims

About Nuveen Preferred Securities Funds

Nuveen Preferred Securities Funds offer high quality portfolios, investing mainly in securities that, at the time of investment, are investment-grade quality. The expectation is that yields for preferred securities should be higher than bonds, because they are lower in capital structure hierarchy, thereby incurring greater risk.

Investor Profile

Are these CEFs right for you?

The features and investment objectives of these funds might be especially appealing to investors seeking:
  • High current income potential consistent with capital preservation
  • Additional diversification within their portfolios
  • Enhanced capital preservation due to low correlation with other asset classes

What are potential risks?

  • Preferred securities are subject to call risk and credit risk
  • Preferred securities are issued by many companies, but the majority of issuers are in the financial sector, leading to sector concentration risk.

Nuveen's Preferred
Securities CEFs

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