Nuveen recommends considering U.S. senior loans for portfolio diversification due to their compelling risk-adjusted return and resilience across various interest rate scenarios.
Investors looking to boost their portfolio should consider allocating some funds to U.S. senior loans, according to Nuveen. The assets are debt instruments issued by well-known companies, like American Airlines and Burger King-parent Restaurant Brands , that are considered below investment grade. They are structured and syndicated by banks to large groups of lenders, such as mutual funds and institutional investors.
Senior loans — which are also referred to as syndicated loans, floating rate loans or bank loans — typically have floating interest rates tied to the Secured Overnight Financing Rate (SOFR). These days, those yields can top 8%. The Bloomberg U.S. Leveraged Loan Index, which has a coupon of 7.99%, currently has a yield to maturity of 8.5%, and a yield to 3-year of 8.63%, Nuveen pointed out. 'It's a very powerful asset class in a lot of different ways,' Scott Caraher, the firm's head of senior loans, said in an interview. 'You're not taking any interest rate or duration risk.' There is credit risk involved, which means investors should carefully consider issuers, he said. However, senior loans are at the top of the capital structure, he noted. 'If something goes wrong, we're first in line to get repaid,' Caraher said. While the Federal Reserve is expected to reduce interest rates further this year, the allocation works in all interest-rate environments, he said. 'You can't time the markets,' Caraher said. 'It really should be a permanent allocation, just like investment-grade or high-yield .' Here are the five reasons Nuveen said it is bullish on senior loans. 1. Compelling risk-adjusted return From a yield-per-duration perspective, senior loans have one of the highest yields in fixed income, with low sensitivity to interest rates, Nuveen wrote in a December not
INVESTING SENIOR LOANS PORTFOLIO MANAGEMENT RISK ADJUSTED RETURN INTEREST RATE ENVIRONMENT
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Nebraska Football Defensive Lineman Ty Robinson Accepts Senior Bowl BidNebraska senior defensive lineman Ty Robinson accepted an offer to play in the 2025 Reese's Senior Bowl on Wednesday, making the announcement on his social media pages.
Read more »
Man Wonders If He Should Pay Off Sister's Student Loans'How much money has your sister given you?'
Read more »
Small-business owners say their federal Covid loans were wrongly sent to collectionsLewis Kamb is a national FOIA reporter for NBC News, based in Seattle.
Read more »
Done Deal: U.S. Loans Ukraine $20 Billion Ahead of Biden’s DepartureSource of breaking news and analysis, insightful commentary and original reporting, curated and written specifically for the new generation of independent and conservative thinkers.
Read more »
Biden admin loans Ukraine $20B backed by profits from ‘immobilized’ Russian assetsToday's Video Headlines: 12/11/24
Read more »
Disaster aid wraps up after Juneau’s glacial outburst flood, but federal loans are availableStarting next week, the Disaster Recovery Center that’s been operating in Juneau’s Mendenhall Valley Public Library since October will start to focus solely on the distribution of Small Business Administration Loans. They’re generally larger and somewhat more flexible than FEMA grants, and you have more time to spend the money.
Read more »