JQC - JQC: 12% Yielding Fixed Income CEF Currently Overpriced

2024-02-16 04:36:26 ET

Summary

• Nuveen Credit Strategies Income Fund is a fixed income CEF focused on leveraged loans, with a high distribution rate of 12%.
• The fund's discount to NAV has rallied significantly, becoming overpriced and at the top of its historic range.
• Credit spreads are currently very tight, indicating an optimistic market outlook, but the next move is expected to be towards wider spreads.
• JQC has a low duration of 0.95 years, and has managed an impressive return exceeding 15% in 2023.
• Active investment management can see trimming of certain positions, even when still holding a certain percentage as a core long-term holding.

Thesis

Nuveen Credit Strategies Income Fund (JQC) is a fixed income CEF. The vehicle comes from a very well-known asset management platform in Nuveen, and has posted robust long-term results. The fund is focused on leveraged loans, asset class which makes up over 73% of the collateral, with the rest allocated to corporate bonds....

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