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Top 5 reasons to consider an allocation to private capital

Golden gate bridge

Investors today are re-evaluating risk and reward in their portfolios. Private credit can fulfill a need for stability, diversification, performance, and yield.

1. Income potential

Private capital can play an important role in portfolio construction as it helps diversify sources of yield and increase overall income potential.

Reason 3: Volatility line graph
 
2. Risk-adjusted returns

Highly selective, diversified private capital portfolios with low losses can provide attractive-risk adjusted returns.

Reason 4: Diversification table 
3. Interest rate protection

The floating rate nature of senior middle market loans positions the asset class well for an environment with rising interest rates, while also demonstrating relatively stable returns in declining rate environments.

Reason 5: Inflation line graph
 
4. Diversification

Private market assets can serve as a less correlated portfolio diversifier.

Reason 2: Returns scatter graph
 
5. Volatility management

Private market valuation methodologies are robust, often led by third party providers, and driven by true credit fundamentals vs the volatility of market sentiment.


Reason 1: Income bar chart
 

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1 Bloomberg as of 3Q 2023. “MM Direct Lending” is represented by Cliffwater Direct Lending Index. “Broadly Syndicated” is represented by Morningstar LSTA US Leveraged Loan 100 Index. “High Yield” is represented by ICE BofA US High Yield Index.

2 “Private Equity” and “Junior Capital” are represented by Cambridge Associates Private Investment Benchmark. “MM Direct Lending” is represented by Cliffwater Direct Lending Index. “High Yield Bonds” is represented by the Bloomberg US Corporate High Yield Total Return Index. “Broadly Syndicated Loans” is represented by the Morningstar LSTA US Leveraged Loan 100 Index. As of 1Q 2023

None of the indices presented are benchmarks or targets for the Company. Please see end of document for additional disclosures regarding indices presented. 3 “MM Direct Lending” is represented by the Cliffwater Direct Lending Index. The Bloomberg US Corporate High Yield Bond Index measures the USD-denominated, high yield, fixed-rate corporate bond market. “Investment Grade Bonds” is represented by the Bloomberg US Aggregate Bond Index. 4 10-Year U.S. Treasury Change: Board of Governors of the Federal Reserve System (US). 5 Source: Bloomberg, 15 Years as of Q3 2023, Quarterly Return Data. Diversification does not assure profit or protect against loss of capital. Sources: “MM Direct Lending” is represented by the Cliffwater Direct Lending Index. “Broadly Syndicated” is represented by the Morningstar LSTA US Leveraged Loan 100 Index. “High Yield” is represented by the Bloomberg US Corporate High Yield Total Return Index. “Corporates” is represented by the Bloomberg US Corporate Bond Index. Data presented is as of 1Q 2023. “Treasuries” - Bloomberg US Treasury Total Return Unhedged USD. As of Sep 30, 2023.

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 his or her financial professionals.

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. Past performance does not predict or guarantee future results. Investing involves risk; principal loss is possible.

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. For term definitions and index descriptions, please access the glossary on nuveen.com. Please note, it is not possible to invest directly in an index.

Important information on risk

Investing involves risk; principal loss is possible. Debt or fixed income securities are subject to market risk, credit risk, interest rate risk, call risk, derivatives risk, dollar roll transaction risk and income risk. As interest rates rise, bond prices fall. Below investment grade or high yield debt securities are subject to liquidity risk and heightened credit risk.

Foreign investments involve additional risks, including currency fluctuation, political and economic instability, lack of liquidity and differing legal and accounting standards. Please note investments in private debt, including leveraged loans, middle market loans, and mezzanine debt, are subject to various risk factors, including credit risk, liquidity risk and interest rate risk.

This information represents the opinion of Nuveen, LLC and its investment specialists and is not intended to be a forecast of future events and or guarantee of any future result.

Information was obtained from third party sources which we believe to be reliable but are not guaranteed as to their accuracy or completeness. There is no assurance that an investment will provide positive performance over any period of time.

Nuveen, LLC provides investment solutions through its investment specialists.

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