Financial advisors have been taking notice of closed-end funds, with the majority1 now using them with their clients for income and diversification. Nuveen sponsored surveys in 2013 and 2016 assessed financial advisors’ views on and usage of closed-end funds, and gathered critical insights into why advisors believe closed-end funds are a compelling income investment opportunity for their clients.
Designed and built for income, closed-end funds seek to provide regular, stable cash flow over time and can serve as a powerful tool for optimizing an income portfolio.
Consider closed-end funds if you’re seeking2:
Because of their unique closed structure and ability to use leverage,3 closed-end funds offer potentially higher distributions4 than traditional income investments.5
Floating rate, shorter duration or equity closed-end funds may help reduce a portfolio’s interest rate sensitivity.
Closed-end funds that invest in real assets and dividend-paying stocks, which typically increase their payments with rising inflation, may help buffer the effects of rising inflation.
Municipal bonds, qualified dividends, and managed distribution programs may help reduce your tax liability on investment income.4
With strategies that provide access to specialized asset classes, including alternatives, Nuveen closed-end funds may enhance portfolio diversification.
2016 Advisor Research Study Results
Learn what differentiates advisors that use closed-end funds and what insights they have to share.
Close the Income Gap® with Closed-End Funds
Consider closed-end funds if you’re seeking to enhance income and cash flow and improve portfolio diversification.
Methodology from 2016 survey
Key Insights from 2016 survey
Investors: Contact your financial advisor
1 Source: Nuveen Advisor Research Study. Six out of ten advisors questions use closed-end funds with their clients.
2 Goal classifications represent common investor concerns when evaluating portfolio needs, are provided for informational purposes only, and are not intended to be relied upon as investment advice or recommendations
3 Leverage typically magnifies the total return of a fund’s portfolio, whether that return is positive or negative, and creates an opportunity for increased common share net income as well as higher volatility of net asset value, market price, and distributions. There is no assurance that a fund’s leveraging strategy will be successful.
4 Income may be subject to state and local income taxes and the alternative minimum tax. Capital gains, if any, will be subject to capital gains tax. QDI may not apply to all investors. Potential distribution sources for managed distribution programs include net investment income, realized gains, and return of capital. Please see www.nuveen.com/cefdistributions for current information.
5 Different types of asset investments have different types of risks, which may provide higher returns but also greater volatility. In general, equity securities tend to be more volatile that fixed income securities. The value of, and income generated by, debt securities will decrease or increase based on changes in market interest rates. As interest rates risk, bond prices fall. In general, below investment grade (high-yield) debt securities tend to be more volatile than investment grade securities. Preferred securities are subordinated to bonds and other debt instruments in a company's capital structure, and therefore are subject to greater credit risk. The interest and principal payments of U.S. Treasury securities are guaranteed.
Potential distribution sources include net investment income, realized gains and return of capital.
There are risks inherent in any investment, including the possible loss of principal. There can be no assurance that fund objectives will be achieved. Closed-end funds frequently trade at a discount to their net asset value.
Past performance is no guarantee of future results.
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