Prudential Financial, PIMCO and Nuveen Investments are launching new dual purpose funds that will focus mostly on leveraged loans but could also invest in high-yield bonds, according to Securities and Exchange Commission (SEC) filings.
While the size of each fund hasn’t been determined, it’s clear that these firms are looking to capitalize on the robust leveraged loan and high yield bond markets, which last year yielded strong returns.
Prudential, which is one of the largest life insurers, plans to launch a mutual fund in March that will invest as much as 80% of its assets in leveraged loans. The remainder of the fund’s assets may be used to purchase unsecured debt, the filing said. Paul Appleby, Joe Lemanowicz and Brian Juliano will manage the new fund.
PIMCO, one of the country’s largest bond managers, will also launch a fund in March. The PIMCO Senior Floating Rate Fund will invest 80% of its assets in a “diversified portfolio of senior debt securities,” according to a SEC filing. PIMCO said it may also invest the fund's assets in fixed-rate fixed income instruments, although it did not specify how the remainder of the fund will be used.
Nuveen, the asset manager owned by Madison Dearborn Partners, plans to launch the Nuveen Short Duration Credit Opportunities Fund, which will invest 70% of its assets in adjustable-rate senior loans and second-lien senior loans. For the balance of the portfolio, “the fund may make additional investments in adjustable rate corporate debt instruments, may take tactical investments in high yield debt instruments and CLOs, and may enter into short positions consisting primarily of high yield debt,” according to an SEC filing.
Nuveen did not specify when it plans to launch its fund in its filing. A Nuveen spokeswoman declined to say when the fund would launch, saying the firm is in a "blackout period."
Nuveen Fund Advisors will be responsible for determining the fund’s overall investment strategy and its implementation, while Symphony Asset Management will be responsible for investing the fund’s assets.