Business Context and Reporting Period
This Form 8-K filing by Nuveen Real Asset Income & Growth Fund (NYSE: JRI) reports an event dated January 26, 2018. The filing details a revision to the Fund's investment policy regarding the inclusion of senior loans as an eligible asset class.
Key Financial Metrics
The filing does not provide specific financial performance data such as revenue, profit, cash flow, margins, debt levels, or liquidity metrics. The document focuses exclusively on policy changes.
Material Changes
- Investment Policy Revision: Effective January 26, 2018, the Fund updated its policy to explicitly include senior loans within its definition of debt securities.
- Allocation Limit: Under normal market conditions, the Fund may now invest up to 5% of its Managed Assets in senior loans.
- Existing Constraints: The Fund remains required to invest at least 80% of Managed Assets in equity and debt securities of real asset-related companies globally, with no more than 40% of Managed Assets invested in debt securities at the time of purchase.
Outlook, Risks, and Management Commentary
Management highlights several specific risks associated with the new senior loan allocation:
- Liquidity Risk: Senior loans may trade infrequently, and settlement periods can range from seven days to several weeks. This may impair the Fund's ability to realize full value or meet cash needs (e.g., redemptions) without incurring losses.
- Valuation and Information Risk: Public information on senior loans is less extensive than for registered securities. The Fund may not have access to material non-public information available to other investors.
- Credit and Collateral Risk: Loans may be unrated or rated below investment grade. While typically secured, collateral value may decline, and access to collateral may be delayed by bankruptcy laws.
- Legal Protections: Senior loans may not be considered "securities," potentially limiting the Fund's reliance on anti-fraud protections under securities laws.
Investor Verification Checklist
- Verify the current percentage of the Fund's portfolio allocated to senior loans against the new 5% limit.
- Review the Fund's liquidity management strategy to understand how it mitigates extended settlement periods for senior loans.
- Assess the credit quality and rating distribution of the senior loans held in the portfolio.
- Confirm whether the inclusion of senior loans alters the Fund's overall risk profile relative to its peer group.