NPCT - NPCT: Fade The Rally In This Multi Asset Fixed Income CEF

2024-07-17 07:10:36 ET

Summary

• NPCT is a high-yielding fixed income CEF launched in 2021, designed for a low interest rate environment with aggressive distribution targets.
• The fund's performance since inception has been poor, with an early 40% loss to investors, but has seen recent gains and a distribution increase.
• NPCT faces risks from duration, credit spreads, and discount to NAV widening, making its longer-term prospects uncertain despite recent positive sentiment.

NPCT overview

The Nuveen Core Plus Impact Fund (NPCT) is a broad-based high yielding fixed income CEF that launched in 2021. Back then, the expectations were for a low interest rate environment, and that investors would continue to seek out comparatively high fixed income investments.

NPCT was therefore designed to make use of plenty of leverage, combined with duration risk, to target quite an aggressively high distribution. Not only that, in terms of credit risk, the mandate is given large scope to invest in the lower rated spectrum of the global fixed income universe....

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