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The municipal bond market has changed | Has your portfolio adapted?
Although the markets change, your investment goals don’t have to.
Get started in three steps:
- Understand the environment
- Identify portfolio needs
- Evaluate solutions
1. Understand the environment
The best performing areas of the municipal market change over time
Where to be positioned across the credit spectrum and yield curve varies depending on the market environment. Actively evaluating a wide range of bonds through extensive credit research and yield curve analysis may help exploit market inefficiencies and manage risk, enhancing return potential.
Municipal supply should be similar to last year, although rising rates could dampen bond refundings
As interest rates have risen, municipal supply is lower year over year. Municipal bond supply is expected to be similar to 2021, comprised of more new money issuance, but fewer refundings and less taxable municipal supply. If interest rates stabilize, taxable new issuance may begin to catch up.
Bonds are not created equal — even when their ratings are the same
Bonds can share a credit rating, but show a wide yield range. The yields of A-rated bonds with 5-year maturities range from 0.4% to 3.5%, making it difficult to assess the credit risk of each bond. Investment managers research extensively to determine if a higher-yielding bond compensates an investor adequately for risk.
2. Identify portfolio needs
Portfolio reviews offer an in-depth analysis of your municipal bond holdings and an action plan to get the most out of your portfolio. To get started, ask your financial professional about a portfolio review.
We look at your municipal bond holdings in a confidential setting, reviewing:
- Does your portfolio match your investment style?
- How many bonds do you own — and what did you pay for them?
- Do you know your portfolio’s sensitivity to interest rate risk?
- Are you capitalizing on bonds that could provide higher income?
Once we know your goals and municipal bond holdings, we assess:
- Credit quality
- Investment style
- Interest rate risk & volatility potential
- Diversification across yield curve, issues, & sectors
Portfolio transition analysis
This enhanced feature outlines which bonds to hold, review further or sell when converting the portfolio to a managed account.
Discuss & deliver
We provide an in-depth explanation of our analysis and results, including strategies for a portfolio that matches your needs, capitalizing on:
- Our ability to buy bonds in bulk, with the potential for higher investor income
- A focus on bonds with higher coupons, which may return cash flow faster with less interest rate risk
- An industry-leading credit research team that continuously monitors the market so you don’t have to
- Portfolio customization options based on a variety of factors, including credit quality, duration, tax considerations and income needs
3. Evaluate solutions
As you review your portfolio with your financial professional to discuss investment goals and asset allocations, consider actively managed and customized municipal options from Nuveen.
|Separately managed account||Mutual fund||Closed-end fund||Interval fund|
Individually managed portfolios customized to the account holder. Investors own the securities.
Daily pricing and liquidity with lower investment minimums. Investors own shares of the fund.
Exchange-traded with intra-day pricing determined by the market. Investors own shares of the fund.
Continuously offered closed-end fund. Investors own shares of the fund.
|Short duration high yield|
|Strategic municipal opps|
Availability may change without notice. From time to time, we may close or reopen strategies. Certain strategies may not be available to certain investors, or may be available as other investment vehicles not listed. Not all products are available at all firms. Please check with your firm for availability.
There is no guarantee that any of the strategies will achieve their stated objectives. There are risks inherent in any investment and these risks should be carefully considered before investing. Not all products are available at all firms. Please check with your firm for availability.
Separately managed accounts, open-end mutual funds, closed-end funds, and interval funds are different types of investment vehicles with different expense structures and different inflows/outflows and distribution requirements. Income may be subject to state and local income taxes. Capital gains, if any, will be subject to capital gains tax..
Leading the way in municipal bonds
Since 1898, Nuveen has been financing essential municipal bond projects and building lasting value for investors. This municipal bond heritage is reflected in the way portfolios are managed today.
- 124 Experience A rich heritage spanning 124 years remains focused on relative value, principal growth and tax-aware investing.
- 25 Research As one of the industry’s largest credit research teams, 25 analysts averaging 20 years experience are dedicated to municipal investing.
- $196B1 Presence Market power and institutional pricing provide an advantage when evaluating and purchasing bonds.
Access municipal expertise with an industry leader
- #1 Separately managed accounts2 municipal market share
- #2 Open-end funds3 municipal market share
- #1 Closed-end funds4 municipal market share
It’s not what you earn, it’s what you keep.®
Investment professionals and assets under management as of 30 Jun 2022.
1 As of 30 Jun 2022. Nuveen assets under management (AUM) is inclusive of underlying investment specialists.
2 Source: Cerulli Associates, The Cerulli Report, U.S. Managed Accounts 2021. Data as of 31 Dec 2020, most recent data available.
3 Nuveen, Morningstar Direct as of 30 Jun 2022. Based on total net assets of U.S. open-end funds for the Nuveen Family of Funds and the TIAA-CREF Funds, excluding exchange-traded funds, money market funds and fund of funds.
4 Nuveen, Morningstar Direct as of 30 Juu 2022. Represents the total net assets of all U.S. closed-end funds in the municipal bond category.
Class I Shares have no sales charge and may be purchased only by specified classes of investors. Other fund share class purchases may be subject to a front-end sales load.
Past performance does not predict or guarantee future results.
Alternative Minimum Tax (AMT) is the federal income tax regime in which the taxpayer will pay the “greater of” (a) the taxpayer’s “regular” federal income tax or (b) the “alternative minimum” tax determined by adding normally deductible tax preference items back into adjusted gross income. If the alternative income tax calculated by this method is higher than the regular tax liability, the regular tax and the amount by which the AMT exceeds the regular tax are paid. The S&P Municipal Bond Index is a broad, market value-weighted index that seeks to measure the performance of the U.S. municipal bond market. Yield is the rate of return on an investment expressed as a percentage.
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. 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.
Institutional trade execution applies primarily to municipal bond trading as part of ongoing account management and generally does not include sales of legacy securities contributed to new or existing accounts or in connection with termination and liquidation instructions. Nuveen seeks to expeditiously and efficiently effect sales of legacy securities contributed to new or existing accounts or in connection with termination and liquidation instructions, generally by directing the execution of sale to the relevant broker-dealer/custodian designated by the client’s managed account program, subject to program limitations. Primarily due to the time constraints and lot sizes applicable to these transactions, and because the full range of trading techniques is generally not available (including aggregation), the prices received in these transactions may be less favorable than the prices that could be attained for sales of securities selected by Nuveen as part of ongoing management. Clients always reserve the right to fund accounts with cash as opposed to legacy securities and to keep any securities in their accounts if terminating Nuveen’s services.
A closed-end fund’s use of leverage creates the possibility of higher volatility for the fund’s per share NAV, market price, distributions and returns. There is no assurance that a fund’s leveraging strategy will be successful. Closed-end funds historical distribution sources have included net investment income, realized gains and return of capital. Closed-end fund shares may frequently trade at a discount or premium to their net asset value. Shares of Exchange-Traded Funds are bought and sold at market price as opposed to net asset value. As a result, an investor may pay more than net asset value when buying and receive less than net asset value when selling. In addition, brokerage commissions will reduce returns. Fund shares are not individually redeemable directly with the Fund, but blocks of shares may be acquired from the Fund and tendered for redemption to the Fund by certain institutional investors in Creation Units. Limited partnerships offer “an interest” to investors (the “Limited Partners”) who meet certain eligibility criteria, as defined in the Investment Company Act of 1940. Limited partnerships may also use leverage and hedging techniques to increase returns and reduce the exposure of the portfolio to adverse business or market conditions. There can be no assurance that the investment objectives of the partnership will be achieved. An interval fund is a non-diversified, closed-end management investment company that continuously offers its common shares. An interval fund is not intended to be a complete investment program and, due to the uncertainty inherent in all investments, there can be no assurance that the fund will achieve its investment objectives. An interval fund’s performance and the value of its investments will vary in response to changes in interest rates, inflation, the financial condition of a security’s issuer, ratings on a security, perceptions of the issuer, and other market factors. Common shares at any point in time may be worth less than your original investment, even after taking into account the reinvestment of fund dividends and distributions.
Portfolio review report/portfolio transition analysis
A Nuveen Municipal Portfolio Review summarizes certain information regarding a prospective client’s preexisting holdings based on data provided by the prospect and/or the prospect’s financial professional and third party sources. The holdings and characteristics of an actual account managed by Nuveen may vary materially from the prospect’s current holdings. This Review is for discussion purposes only and is not a recommendation to buy or sell any securities or a particular investment strategy.
The Portfolio Transition Analysis does not reflect, establish or evidence an advisory or fiduciary relationship between Nuveen and the prospect; is not based on the financial status, investment objectives, tax situation, or needs of a specific client; and is not and should not be relied upon as investment advice that should be independently relied upon by the prospect or their financial professional. An advisory or fiduciary relationship between Nuveen and the prospect requires the execution of an investment advisory agreement. Nuveen reserves the right to take actions that differ from the analysis based on its then current investment advice, market conditions, and client-specific information.
Important information on risk
An investment in any municipal portfolio should be made with an understanding of the risks involved in investing in municipal bonds, such as interest rate risk, credit risk, and market risk. The value of the portfolio will fluctuate based on the value of the underlying securities. If sold prior to maturity, municipal securities are subject to gain/losses based on the level of interest rates, market conditions and the credit quality of the issuer. Income may be subject to the alternative minimum tax (AMT) and/or state and local taxes, based on the investor’s state of residence. Income from municipal bonds held by a portfolio could be declared taxable because of unfavorable changes in tax laws, adverse interpretations by the Internal Revenue Service or state tax authorities, or noncompliant conduct of a bond issuer. Some income may be subject to state and local taxes and to the federal alternative minimum tax. Capital gains, if any, are subject to tax. Please contact a tax professional regarding the suitability of tax-exempt investments in your portfolio. Nuveen and its investment specialists do not provide tax advice.
If evaluating investment companies, please carefully consider the investment objectives, risks, charges and expenses before investing. For this and other information that should be read carefully, please obtain a prospectus or summary prospectus from your financial advisor or Nuveen at 800.257.8787 or visit nuveen.com.
Nuveen Asset Management, LLC is a registered investment adviser and an affiliate of Nuveen, LLC.