JRI - JRI: Good Income Play But Inflation Protection Could Be Better

2024-03-27 09:59:03 ET

Summary

• The Nuveen Real Asset Income and Growth Fund offers investors a way to diversify their portfolio with hard assets and earn a high level of current income.
• The JRI closed-end fund has performed well, with a 7.96% return over four months, but has underperformed the S&P 500 Index.
• The fund's allocation to debt securities and limited exposure to real estate common equities may limit its ability to protect against inflation.
• The fund fully covered its distribution for the full-year 2023 period, but it appears to be struggling to do so year-to-date.
• The fund is currently trading at a very attractive discount on net asset value.

The Nuveen Real Asset Income and Growth Fund ( JRI ) is a closed-end fund, or CEF, that investors can employ as a way of diversifying their portfolio into hard assets while still retaining a high level of current income. Hard assets are something that many investors may not have exposure to, as many of the largest companies in the S&P 500 Index ( SP500 ) do not derive a significant percentage of their valuation from such assets. Here are the largest companies in the index right now:

Hard assets are things such as gold, real estate, infrastructure, and similar things that a person can physically look at, touch, and hold in their hands. As we can very quickly see, none of the ten largest companies in the American large-capitalization index have significant exposure to any of these types of assets. The sole exceptions are arguably Berkshire Hathaway’s ownership of a railroad and JPMorgan Chase potentially having ownership of mortgage-backed securities, but neither of those are large enough positions in their overall corporate structures to qualify as an investor in these companies having ownership of hard assets. Thus, with the exception of our own homes, few of us likely have significant ownership of real, tangible assets. The Nuveen Real Asset Income and Growth Fund is one way to change that state of affairs and obtain an attractive 10.29% yield while doing so....

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