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Income Investing

The ongoing case for senior loans

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What are senior loans?
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How senior loans may benefit a portfolio

Relative to most bond categories, senior loans have historically provided increased income, lower duration and low correlation to interest rate changes.

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Larry Holzenthaler, Client Portfolio Manager for global fixed income, recently appeared on a podcast with the Active Investment Company Alliance to discuss senior loans.
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For more information about how senior loans may enhance your investment portfolio, consult with your financial advisor, or visit nuveen.com.


Glossary
For term definitions and index descriptions, please access the glossary .

A word on risk
Investing involves risk; principal loss is possible. Different types of asset investments have different types of risks, which may provide higher returns but also greater volatility. Income is only one component of performance and an investor should consider all of the risk factors for each asset class before investing. Except in certain circumstances, income is generally subject to both federal and state taxes. Fixed income securities may be susceptible to general movements in the bond market and are subject to credit and interest rate risks. Credit risk arises from an issuer’s ability to make interest and principal payments when due, as well as the prices of bonds declining when an issuers credit quality is expected to deteriorate. Interest rate risk occurs when interest rates rise causing bond prices to fall. The value of, and income generated by, debt securities will decrease or increase based on changes in market interest rates. Government bonds are guaranteed as to the timely payment of principal and interest. However, there are other factors that can contribute to how securities react in various interest rate environments. Below investment grade or high yield debt securities are subject to heightened credit risk, liquidity risk and potential for default. The issuer of a debt security may be able to repay principal prior to the security’s maturity, known as prepayment (call) risk, because of an improvement in its credit quality or falling interest rates. In this event, this principal may have to be reinvested in securities with lower interest rates than the original securities, reducing the potential for income. Senior loans may not be fully secured by collateral, generally do not trade on exchanges, and are typically issued by unrated or below-investment grade companies, and therefore are subject to greater liquidity and credit risk. Preferred securities are subordinate to bonds and other debt instruments in a company’s capital structure. They combine the features of bonds and stocks, and have credit risk based on the issuer’s ability to make interest and dividend payments when due. Certain types of preferred, hybrid or debt securities with special loss absorption provisions, such as contingent capital securities (CoCos), may be or become so subordinated that they present risks equivalent to, or in some cases even greater than, the same company’s common stock. Asset-backed and mortgage-backed securities are subject to additional risks such as prepayment risk, liquidity risk, default risk and adverse economic developments. Concentration in specific sectors may involve greater risk and volatility than more diversified investments.

Before investing, carefully consider the investment objectives, risks, charges and expenses. For this and other information that should be read carefully, please request a prospectus or summary prospectus from your financial professional or Nuveen at 800.257.8787 or visit nuveen.com.

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