Skip to main content
utility-drawer__close
0
Add funds
Fund 1
Fund 2
Fund 3
Fund 4
Welcome to Nuveen
Select your preferred site so we can tailor your experience.
Select Region...
  • Americas
  • Asia Pacific
  • Europe, Middle East, Africa
location select
Select Location...
  • Canada
  • Latin America
  • United States
  • Australia
  • Hong Kong
  • Japan
  • Mainland China
  • Malaysia
  • New Zealand
  • Singapore
  • South Korea
  • Taiwan
  • Thailand
  • Other
  • Abu Dhabi Global Market (ADGM)
  • Austria
  • Belgium
  • Denmark
  • Finland
  • France
  • Germany
  • Ireland
  • Italy
  • Luxembourg
  • Netherlands
  • Norway
  • Spain
  • Sweden
  • Switzerland
  • United Kingdom
  • Other
location select
Financial Professional
  • Institutional Investor
  • Individual Investor
  • Financial Professional
  • Global Cities REIT (GCREIT)
  • Green Capital
  • Private Capital Income Fund (PCAP)
location select
Alternatives

CLO advisor playbook

Mountains along side the river

Elevate your practice by delivering differentiated value

Collateralized loan obligations (CLOs) were once the exclusive domain of large institutional investors. Today, they are accessible to an array of wealth clients through a variety of fund structures. This evolution presents financial advisors with an exciting opportunity to bring a developed, institutional-grade investment solution to their clients.

CLOs offer several valuable benefits, including historically higher income and lower defaults compared to similarly rated corporate bonds, as well as diversification to a core bond allocation. By incorporating CLOs into their toolkit, advisors can position themselves as forward-thinking professionals delivering value beyond traditional strategies.

Nuveen’s CLO advisor playbook is designed to equip you with the knowledge and tools to effectively integrate CLOs into your practice, helping you improve client outcomes and stand out in an increasingly competitive marketplace.

Key takeaways

Benefits for investors

CLOs can offer powerful benefits to a client portfolio, providing opportunities for enhanced yield, diversification, active risk management and opportunistic capital deployment.

Enhanced yield

As illustrated in the chart below, CLOs typically deliver higher yields compared with traditional fixed income investments. This yield advantage stems from three main factors. First, securitization allows CLOs to segment risk and yield across various tranches, amplifying returns for the junior-most tranches through the structure’s inherent leverage. Second, the complexity of CLOs provides a premium for investors willing to analyze and participate in a market that is often misunderstood, and investors are compensated with higher yields for the effort required to navigate this more complex market. Finally, CLO managers actively manage loan pools, taking advantage of market volatility to rotate out of credits with deteriorating fundamentals and into higher-yielding opportunities.

CLO's enhanced yield chart
Diversification

CLOs have low correlations with traditional equities and bonds, as well as minimal interest rate risk, making them a valuable tool for portfolio diversification, particularly during periods of volatility. In addition, each CLO portfolio is a diversified mix of loans to 150 – 200+ companies across industries, sub-sectors and credit ratings. This diversification reduces concentration risk and helps provide a more stable return profile for investors.

Active risk management and opportunistic capital deployment

In contrast to private credit funds, where managers often lack the ability to exit underperforming positions, CLO collateral managers can utilize the liquidity in the underlying loans to capitalize on market dislocations and minimize risk by shifting allocations across industries or issuers. This flexibility can be especially valuable during periods of market volatility, when loans from fundamentally strong companies may become undervalued, creating opportunities to buy high or higher quality assets at discounted prices.

Please consult your financial professional for more information. For financial professionals, please contact Nuveen at 800-221-9271.

Download the full playbook

Other recent insights
Webinar replay The Social Security Fairness Act: And what it means for your advisors
The Social Security Fairness Act, signed into law on January 5th, 2025, eliminated certain restrictions on Social Security benefits for individuals who earned a government pension while not contributing to Social Security. Many of your clients may be affected.
Advisor Education Social Security guidance helps clients and can boost referrals
Strengthen your client relationships by keeping them informed about Social Security benefits they are entitled to receive.
Advisor Education Tax-loss harvesting
Leverage volatility to lower taxes and enhance portfolio value.

This material is not intended to be a recommendation or investment advice, does not constitute a solicitation to buy, sell or hold a security or an investment strategy, and is not provided in a fiduciary capacity. The information provided does not take into account the specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on an investor’s objectives and circumstances and in consultation with their financial professional.

The views and opinions expressed are for informational and educational purposes only as of the date of production/writing and may change without notice at any time based on numerous factors, such as market or other conditions, legal and regulatory developments, additional risks, and uncertainties and may not come to pass. This material may contain forward-looking information that is not purely historical in nature. Such information may include, among other things, projections, forecasts, estimates of market returns, and proposed or expected portfolio composition. Any changes to assumptions that may have been made in preparing this material could have a material impact on the information presented herein by way of example.

All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability, or completeness of, nor liability for, decisions based on such information, and it should not be relied on as such.Performance data shown represents past performance and does not predict or guarantee future results. Important information on risk

All investments carry a certain degree of risk, including loss of principal, and there is no assurance that an investment will provide positive performance over any period of time. 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.

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.

Aerial view of the ocean shore

You are on the site for: Financial Professionals and Individual Investors. You can switch to the site for: Institutional Investors or Global Investors

You are about to access our website for visitors outside of the United States.

You are about to access our website for Nuveen Global Cities REIT

You are leaving the Nuveen website.

You are leaving the Nuveen website and going to the website of the MI 529 Advisor Plan, distributed by Nuveen Securities, LLC.

The Nuveen website for institutional investors is available for you.

You are about to access our website for visitors outside of the United States.

You are about to access our website for Nuveen Churchill Private Capital Income Fund (“NC - PCAP”)

Contact us
Contact us
Back to Top