Different types of asset investments have different types of risks, which may provide higher returns but also greater volatility. There is no assurance that any asset class or index will provide positive performance over time. Different benchmarks, economic periods, methodologies and market conditions will produce different results. See Endnotes for important disclosures regarding asset class related risks and definitions of each representative asset class. It is not possible to invest directly in an index.
Chart 1 Data sources: Bloomberg L.P. for specified time periods ending 12/31/16. Past performance is no guarantee of future results.
Representative Indexes: 90-Day T-Bill: Bloomberg Barclays U.S. Treasury Bellwethers 3 Month Index; 10-Year Treasury: Bloomberg Barclays U.S. Treasury Bellwethers 10 Yr. Index; 30-Year Treasury: Bloomberg Barclays U.S. Treasury Bellwethers 30 Yr. Index; Investment Grade Municipal Bonds: Bloomberg Barclays Municipal Index; Investment Grade Corporate Bonds: Bloomberg Barclays U.S. Corporate Index.
Chart 2 Data sources: Bloomberg L.P. and BofA Merrill Lynch as of 3/31/17. Past performance is no guarantee of future results. Yields for bonds are yield-to-worst. Yield-to-worst is the lowest potential yield that can be received on a bond without the issuer defaulting. Senior Loans yield is the 3-Year Yield to Average Life. The 3-Year Yield to Average Life is the par-weighted average time (in years) to the principal repayment for non-callable securities and the par-weighted average time (in years) to the probable call/put for callable securities.
Representative Indexes: U.S. Treasury Bonds: Bloomberg Barclays U.S. Treasury Index; Investment Grade Municipal Bonds: Bloomberg Barclays Municipal Index; Broad Bond Market: Bloomberg Barclays U.S. Aggregate Bond Index; Preferred Securities: BofA Merrill Lynch Preferred Stock Fixed Rate Index; Investment Grade Corporate Bonds: Bloomberg Barclays U.S. Corporate Index; Real Assets: Real Asset Income Blend; High Yield Corporate Bonds: Bloomberg Barclays Corporate High Yield 2% Issuer Capped Index; High Yield Municipal Bonds: Bloomberg Barclays High Yield Municipal Bond Index; Senior Loans: Credit Suisse Leveraged Loan Index.
Chart 3 Data source: Bloomberg L.P. as of 3/31/17. Past performance is no guarantee of future results. Yields are yield-to-worst. Yield-to-worst is the lowest potential yield that can be received on a bond without the issuer defaulting. The indexes assume reinvestment of all distributions and interest payments. Examples are shown for illustrative purposes only.
Representative Indexes: 2-Year Treasury: Bloomberg Barclays U.S. Treasury Bellwethers 2 Yr. Index; 10-Year Treasury: Bloomberg Barclays U.S. Treasury Bellwethers 10 Yr. Index; 30-Year Treasury: Bloomberg Barclays U.S. Treasury Bellwethers 30 Yr. Index.
Chart 4 Data source: Morningstar Direct, 6/1/07 – 3/31/17, longest time period available for the Real Asset Income Blend. Past performance is no guarantee of future results. Rising rate environment is represented by the months when the 10-Year U.S. Treasury return is less than 0.0%. The average rising rate monthly return for the 10-Year U.S. Treasury during the above stated period was -1.18%. Declining rate environment is represented by the months when the 10-Year U.S. Treasury return is more than 0.0%. The average declining rate monthly return for the 10-Year U.S. Treasury during the above stated period was 2.10%. Returns assume the reinvestment of income and no transaction costs or taxes.
Representative Indexes: Broad Bond Market: Bloomberg Barclays U.S. Aggregate Bond Index; High Yield Corporate Bonds: Bloomberg Barclays Corporate High Yield 2% Issuer Capped Index; High Yield Municipal Bonds: Bloomberg Barclays High Yield Municipal Bond Index; Investment Grade Corporate Bonds: Bloomberg Barclays U.S. Corporate Index; Investment Grade Municipal Bonds: Bloomberg Barclays Municipal Index; Preferred Securities: BofA Merrill Lynch Preferred Stock Fixed Rate Index; Real Assets: Real Asset Income Blend; Senior Loans: Credit Suisse Leveraged Loan Index; U.S. Treasury Bonds: Bloomberg Barclays U.S. Treasury Index.
Chart 5 Data sources: Bloomberg L.P. and Credit Suisse as of 3/31/16. Past performance is no guarantee of future results. Credit Sectors shown are not representative of all available credit sectors. Senior Loans yield is the 3-year yield to average life. The 3-year yield to average life is the par-weighted average time (in years) to the principal repayment for non-callable securities and the par-weighted average time (in years) to the probable call/put for callable securities. Short Duration High Yield Municipal Bonds yield is the option-adjusted yield. Option-adjusted yield is calculated by adding/subtracting the value of a call option/put option to the bond’s market price to obtain the price of an otherwise equivalent but option-free bond. The yield that equates this new higher/lower price to the bond’s cash flows to maturity is the option-adjusted yield. Yields for all other bonds are yield-to-worst. Yield-to-worst is the lowest potential yield that can be received on a bond without the issuer defaulting. Duration is a measure of the sensitivity of the price of a fixed-income investment to a change in interest rates. Duration for Senior Loans is based on the maximum reset period for loan interest payments, which is quarterly – or the equivalent of 0.25 years effective duration. As interest rates rise, bond prices fall.
Representative Indexes: Broad Bond Market: Bloomberg Barclays U.S. Aggregate Bond Index; High Yield Corporate Bonds: Bloomberg Barclays Corporate High Yield 2% Issuer Capped Index; High Yield Municipal Bonds: Bloomberg Barclays High Yield Municipal Bond Index; Investment Grade Corporate Bonds: Bloomberg Barclays U.S. Corporate Index; Investment Grade Municipal Bonds: Bloomberg Barclays Municipal Index; Preferred Securities: BofA Merrill Lynch Preferred Stock Fixed Rate Index; Senior Loans: Credit Suisse Leveraged Loan Index; Short Duration High Yield Municipal Bonds: S&P Short Duration Municipal Yield Index; U.S. Treasury Bonds: Bloomberg Barclays U.S. Treasury Index.
Chart 6 Data sources: Bloomberg L.P. and BofA Merrill Lynch, 4/1/97 – 3/31/17. Past performance is no guarantee of future results. Credit spreads reflect the yield premium over higher-quality bonds as represented by U.S. Treasury Bonds.
Representative Indexes: High Yield Corporate Bonds: Bloomberg Barclays Corporate High Yield 2% Issuer Capped Index; Preferred Securities: BofA Merrill Lynch Preferred Stock Fixed Rate Index; Investment Grade Corporate Bonds: Bloomberg Barclays U.S. Corporate Index.
Chart 7 Data sources: Bloomberg L.P., BofA Merrill Lynch and Credit Suisse, 4/1/97 – 3/31/17. Past performance is no guarantee of future results. Returns are the average across months when the spread between the Bloomberg Barclays Corporate High Yield 2% Issuer Capped Index and the Bloomberg Barclays U.S. Treasury Index widened or narrowed. Returns assume the reinvestment of income and no transaction costs or taxes.
Representative Indexes: High Yield Corporate Bonds: Bloomberg Barclays Corporate High Yield 2% Issuer Capped Index; Senior Loans: Credit Suisse Leveraged Loan Index; Preferred Securities: BofA Merrill Lynch Preferred Stock Fixed Rate Index; Emerging Markets Debt: Bloomberg Barclays Emerging Markets USD Aggregate Index; Investment Grade Corporate Bonds: Bloomberg Barclays U.S. Corporate Index; Mortgage Backed Securities: Bloomberg Barclays U.S. MBS Index; Broad Bond Market: Bloomberg Barclays U.S. Aggregate Bond Index; U.S. Treasury Bonds: Bloomberg Barclays U.S. Treasury Index.
Chart 8 Data sources: Bloomberg L.P., BofA Merrill Lynch, and Credit Suisse, 4/1/97 – 3/31/17. Past performance is no guarantee of future results. Returns assume the reinvestment of income and no transaction costs or taxes. Standard Deviation (Risk) is a statistical measure of the historical volatility of a mutual fund or portfolio; the higher the number, the greater the risk.
Representative Indexes: Broad Bond Market: Bloomberg Barclays U.S. Aggregate Bond Index; U.S. Treasury Bonds: Bloomberg Barclays U.S. Treasury Index; Investment Grade Corporate Bonds: Bloomberg Barclays U.S. Corporate Index; Senior Loans: Credit Suisse Leveraged Loan Index; Preferred Securities: BofA Merrill Lynch Preferred Stock Fixed Rate Index; High Yield Corporate Bonds: Bloomberg Barclays Corporate High Yield 2% Issuer Capped Index.
Chart 9 The tax-exempt yields are for illustration only. Some income and interest on out-of state bonds may be subject to state and local taxes and to the federal alternative minimum tax (AMT). Capital gains, if any, are subject to tax.
Chart 10 Data source: Bloomberg L.P. s as of 3/31/17. Past performance is no guarantee of future results. Yields are yield-to-worst. Yield-to-worst is the lowest potential yield that can be received on a bond without the issuer defaulting. Taxable-equivalent yield is the yield a taxable investment needs to possess (before taxes) for its yield to be equal to that of a tax-free municipal investment. They do not take into account the effects of the federal alternative minimum tax (AMT) or capital gains taxes.
Representative Indexes: Short Term Corporate Bonds: Bloomberg Barclays U.S. Government/Credit 1-3 Year Index; Short Term Municipal Bonds: Bloomberg Barclays Municipal Short Index; Intermediate Term Corporate Bonds: Bloomberg Barclays U.S. Government/Credit Intermediate Index; Intermediate Term Municipal Bonds: Bloomberg Barclays Municipal Intermediate Index; Long Term Corporate Bonds: Bloomberg Barclays U.S. Long Corporate Index; Long Term Municipals: Bloomberg Barclays Municipal Long Bond Index; High Yield Corporate Bonds: Bloomberg Barclays Corporate High Yield 2% Issuer Capped Index; High Yield Municipal Bonds: Bloomberg Barclays High Yield Municipal Bond Index.
Endnotes
Asset Class Related Risk
Different types of asset investments have different types of risks, which may provide higher returns but also greater volatility. In general, equity securities tend to be more volatile than fixed income or hybrid securities. The value of, and income generated by, debt securities will decrease or increase based on changes in market interest rates. As interest rates rise, bond prices fall. 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. Preferred securities 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. The value of a REIT can be hurt by economic downturns or by changes in real estate values, rents, property taxes, interest rates, tax treatment, regulations, or the legal structure of the REIT. Infrastructure-related securities may involve greater exposure to adverse economic, regulatory, political and legal changes. Except in certain circumstances, income is generally subject to both federal and state taxes. Income is only one component of performance and an investor should consider all of the risk factors for each asset class before investing.
Representative Asset Class Definitions
2-YEAR TREASURY: The Bloomberg Barclays U.S. Treasury Bellwethers 2 Yr. Index is an unmanaged index representing the on-the-run (most recently auctioned) U.S. Treasury bond with 2 years’ maturity.
10-YEAR TREASURY: The Bloomberg Barclays U.S. Treasury Bellwethers 10 Yr. Index is an unmanaged index representing the on-the-run (most recently auctioned) U.S. Treasury bond with 10 years’ maturity.
30-YEAR TREASURY: The Bloomberg Barclays U.S. Treasury Bellwethers 30 Yr. Index is an unmanaged index representing the on-the-run (most recently auctioned) U.S. Treasury bond with 30 years’ maturity.
90-DAY T-BILL: The Bloomberg Barclays U.S. Treasury Bellwethers 3 Month Index is an unmanaged index representing the on-the-run (most recently auctioned) U.S. Treasury bill with 3 months’ maturity.
BROAD BOND MARKET: The Bloomberg Barclays U.S. Aggregate Bond Index represents securities that are SEC-registered, taxable and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities and asset-backed securities. These major sectors are subdivided into more specific indices that are calculated and reported on a regular basis.
EMERGING MARKETS DEBT: The Bloomberg Barclays Emerging Markets USD Aggregate Index is a flagship hard currency Emerging Markets debt benchmark that includes fixed and floatingrate U.S. dollar-denominated debt issued from sovereign, quasi-sovereign, and corporate EM issuers.
HIGH YIELD CORPORATE BONDS: The Bloomberg Barclays Corporate High Yield 2% Issuer Capped Index tracks the performance of U.S. non-investment-grade bonds and limits each issuer to 2% of the index.
HIGH YIELD MUNICIPAL BONDS: The Bloomberg Barclays High Yield Municipal Bond Index is an unmanaged index consisting of noninvestment-grade, unrated or below Ba1 bonds.
INTERMEDIATE TERM CORPORATE BONDS: The Bloomberg Barclays U.S. Government/Credit Intermediate Index is an unmanaged index that consists of dollar-denominated, investment-grade, publicly-issued securities with a maturity between one and ten years that are issued by both corporate issuers and non-corporate issuers.
INTERMEDIATE TERM MUNICIPAL BONDS: The Bloomberg Barclays Municipal Intermediate Index is a subset of the Bloomberg Barclays Capital Municipal Bond Index including maturities of five to ten years.
INVESTMENT GRADE CORPORATE BONDS: The Bloomberg Barclays U.S. Corporate Index is a broad based benchmark that measures the investment grade, fixed-rate, taxable, and corporate bond market.
INVESTMENT GRADE MUNICIPAL BONDS: The Bloomberg Barclays Municipal Index covers the USD denominated long-term tax-exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds and prerefunded bonds.
LONG TERM CORPORATE BONDS: The Bloomberg Barclays U.S. Long Corporate Index includes dollar-denominated debt from U.S. and non-U.S. industrial, utility and financial institutions issuers with a duration of 10+ years.
LONG TERM MUNICIPAL BONDS: The Bloomberg Barclays Municipal Long Bond Index is a subset of the Bloomberg Barclays Capital Municipal Bond Index including maturities of 22 or more years.
MORTGAGE BACKED SECURITIES: The Bloomberg Barclays U.S. Mortgage Backed Securities (MBS) Index tracks agency mortgage backed pass-through securities.
PREFERRED SECURITIES: The BofA Merrill Lynch Preferred Stock Fixed Rate Index is designed to replicate the total return of a diversified group of investment-grade preferred securities.
REAL ASSETS: The Real Asset Income Blend is a custom Nuveen blend composed of a weighting of 28% S&P Global Infrastructure Index, 21% FTSE EPRA/NAREIT Developed Index, 18% Wells Fargo Hybrid & Preferred Securities REIT Index, 15% Bloomberg Barclays Global Capital Securities Index and 18% Bloomberg Barclays U.S. Corporate HY Index.
SENIOR LOANS: The Credit Suisse Leveraged Loan Index is designed to mirror the investable universe of the U.S. dollar-denominated leveraged loan market. Loans are added to the index if they qualify according to the following criteria: The highest Moody’s/S&P ratings are Ba1/BBB+, only funded term loans are included, and the tenor must be at least one year.
SHORT DURATION HIGH YIELD MUNICIPAL BONDS: The S&P Short Duration Municipal Yield Index contains all bonds in the S&P Municipal Bond Index that mature between 1 month and 12 years, and maintains a 10% weighting to AA rated bonds, 10% to A rated bonds, 20% to BBB rated bonds and 60% to BIG/NR bonds.
SHORT TERM CORPORATE BONDS: The Bloomberg Barclays U.S. Government/Credit 1-3 Year Index is an unmanaged index considered representative of performance of short-term U.S. corporate bonds and U.S. government bonds with maturities from one to three years.
SHORT TERM MUNICIPAL BONDS: The Bloomberg Barclays Municipal Short Index is a subset of the Bloomberg Barclays Municipal Bond Index that measures the performance of investment-grade issues with maturities of one to five years.
U.S. TREASURY BONDS: The Bloomberg Barclays U.S. Treasury Index includes public obligations of the U.S. Treasury. Treasury bills are excluded by the maturity constraint but are part of a separate Short Treasury Index. In addition, certain special issues, such as state and local government series bonds (SLGs), as well as U.S. Treasury TIPS, are excluded. STRIPS are excluded from the index because their inclusion would result in double counting.
A Word 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, settlement risk, tax risk, political and economic risk, derivatives risk, liquidity risk, income risk, and other investment company risk. As interest rates rise, bond prices fall. Below investment grade or high yield debt securities are subject to heightened credit risk, liquidity risk and potential for default. Foreign investments involve additional risks including currency fluctuation, political and economic instability, lack of liquidity and differing legal and accounting standards. Asset-backed and mortgage-backed securities are subject to additional risks such as prepayment risk, liquidity risk, default risk and adverse economic developments. Preferred securities are subordinate to bonds and other debt instruments in a company’s capital structure and therefore are subject to greater credit risk.
Equity investments such as those held by the Nuveen NWQ Flexible Income Fund and the Nuveen Real Asset Income Fund, are subject to market risk, common stock risk, call risk, and derivatives risk.
Concentration in specific sectors may involve greater risk and volatility than more diversified investments. The financial services sector may involve greater exposure to adverse economic or regulatory occurrences. The real estate sector involves the risk of exposure to economic downturns and changes in real estate values, rents, property taxes, interest rates and tax laws. Infrastructure-related securities may involve greater exposure to adverse economic, regulatory, political, legal and other changes affecting such securities.
A municipal bond fund’s use of inverse floaters creates effective leverage. Leverage involves the risk that the fund could lose more than its original investment and also increases the fund’s exposure to volatility, interest rate risk and credit risk.
The Nuveen High Yield Municipal Bond Fund concentrates in noninvestment-grade and unrated bonds with long maturities and durations which carry heightened credit risk, liquidity risk, and potential for default. In addition, the fund often times engages in a significant amount of portfolio leverage and in doing so, assume a high level of risk in pursuit of its objectives. These and other risk considerations are described in detail in each Fund’s prospectus.
Closed-end funds frequently trade at discount to their net asset value. Leverage increases return volatility and magnifies the fund’s potential return and its risks; there is no guarantee a fund’s leverage strategy will be successful. These and other risk considerations are described in detail on each Fund’s web page at www.nuveen.com.
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 Investments at 800-257-8787 or visit nuveen.com or www.nuveen.com/cef.