Investors who select closed-end funds as a part of their portfolios are likely to find severalꦍ advantages to doing so, especially if they understand what makes these offerings unique fro🍌m other types of funds.

A well-managed closed-end fund (CEF) can provide the opportunity to balan꧑ce risk and increase income, particularly when💛 combined with a well-constructed portfolio strategy. Below, we’ve outlined some key considerations to help you determine if CEFs are right for you.

Are you looking for an added source of income?

One of the main benefits of CEFs is their ability to generate income. In ⛦fact, CEFs are designed to provide regular distributions on a monthly or quarterly basis. This applies whether the fund invests in traditional income securities (such as bonds) or other types of securities (such as stock or alternatives).

The use of leverage—borrowed capital which allows for additional investments—also contributes to CEFs’ ability to generate higher income. This is a tactic employed by the majority of CEFs whi♔ch can broaden🧜 a fund’s exposure and contribute to higher returns.

What is your risk tolerance?

Risk tolerance is an important consideration when thinking about CEFs. Like all investment products, CEFs carry a certain amount of risk but they can be an appealing option due to their income potential. That risk🐓 may also be higher or lower depen༒ding on how the funds are invested.

The use of leverage can also play a role when it comes to risk. This is becaus🌃e leverage increases volatility and magnifies both positive and negative returns. While this is important to keep in mind, it’s worth💜 noting that over longer periods of time, leverage has historically been shown to have on fund performance.

Price and liquidity are also important factors. Since CEFs are traded on an exchange, like a stock, they carry certain price risks. This means that if you want to sell your shares, you will need to do so at the current market♎ price, which may be higher or lower than the price you paid. Liquidity risk requires similar considerations as some CEFs may be larger and more liquid than others.

What is your investment horizon?

Your investment horizon can play a significant role in determining which types of investments are right for you. Since CEFs are generally designed as long-term investments, they♓’re often better suited to those with a longer investment horizon.

Certain CEFs are also term funds designed to be liquidated at the end of a designated time period. When this period ends, shareholders receive the current net ass𝓀et value (NAV) per share of the fund—the value of the fund’s assets minus its liabilities divided by the number of outstanding shares. CEF NAVs tend to be more stable and predictable than prices set in the market. Therefore, if you have a clear sense of your investment horizon, and prefer a greater level of potential price certainty than selling shares in the open market, selecting a term fund that aligns with your desired♌ timing could be a good option.

Are you interested in diversification?

Another key feature of CEFs is that they can help to enhance portfolios through diversification. This is true even for fixed-income portfolios since CEFs can offer diversification on a variety of different levels including at the geographic, industry and security levels. Depending on the types of CEFs you choose, you can also gain exposure to a wide range of asset🍨 classes, including international and emerging market securities.

As part of a comprehensive strategy, CEFs can offer new opportunities for income. If you’re interested in adding CEFs to your portfolio mix, selecting the right ones can make a big difference. With more than 30 years of experience managing CEFs, Nuveen has designed to meet varying investor objectives. And with deep exp🧔ertise across both traditional and alternative investments, Nuveen actively manages funds to pursue lasting value.

As pa෴rt of a comprehensive portfolio strategy, CEFs can provide an effective mix of income and diversification. They also provide steady distributions and access to a broader investment universe. Whether you’re considering ways to expand your portfolio or seeking additional sources of income, adding CEFs to your portfolio could help to enhance your returns and allow you to tap into new areas of the market.

It is important to consider the objectives, risks, charges and expenses of any fund before investing. Investing in closed-end funds involves risk; principal loss is possible. There is no guarantee a fund’s investment objective will be achieved. Closed-end fund shares may frequently trade at a discount or premium to their net asset value (NAV). Closed-end fund historical distribution sources include net investment income, realized gains, and return of capital. All investments carry a certain degree of risk and there is no assurance that an investment will provide positive performance over any period of time. Leverage increases return volatility and magnifies a fund’s potential return whether that return is positive or negative. There is no guarantee a fund’s leveraging strategy will be successful.

Nuveen Securities, LLC., member FINRA and SIPC.
EWB-1700108PR-E0721X