Authors
Jose Minaya
CEO, Nuveen
At Nuveen, we have a responsibility to generate reliable returns and build financial security for thousands of institutions and financial advisors representing millions of investors around the world. The biggest threat to that effort right now is continued market volatility and uncertainty. What was once an academic portfolio exercise about preparing for a challenging environment has now taken on a far greater sense of urgency. Risk has always been inherent in this business, but in the current interest rate environment, there are better options than having a large allocation of cash. And over the last several years we’ve been building capabilities and strategies that are designed for this moment to help investors manage the risks posed by that threat.
The first is centered around diversified portfolio construction. Far beyond the 60/40 split, we see an approach that brings the right mix of investments, both public and private, traditional, and alternative, to handle almost any market environment. From real assets and natural capital to infrastructure and private capital, we’ve been building new platforms for years now to provide access to harder-to-reach investments that deliver results in inflationary and higher-for-longer interest rate environments. We’ve been working directly with both individuals and institutions to address their needs and those of their stakeholders. And in the retirement channel, we’ve been opening new pathways to streams of lifetime income.
There are better options than having a large allocation of cash.
Second is incorporating environmental, social, and governance factors into our investment process. In 2023, we saw a variety of them set into motion, including advancements in the global energy transformation, a focus on affordable housing, and greater corporate transparency. We appreciate that these factors are far more polarizing today than ever before, but we hear the concerns of clients, and we see the attention being paid by regulators as a sign that transparency, intent, and engagement in these issues on behalf of constituents is here to stay. Political debates aside, we have a fiduciary responsibility to make sure that we continue to consider these factors in our thinking because stakeholders increasingly demand it, prudent investment management requires it, and those who dismiss it face greater actual risks.
Third is advancing income. A PLANADVISOR survey showed that 85 percent of plan participants said they wanted something that would provide income generation in retirement. For several years now, we’ve worked on innovative solutions that incorporate guaranteed lifetime income streams into defined contribution plans. With Secure Acts 1.0 and 2.0 passing with support from both sides of the aisle, the time to deliver this option has finally arrived. Last fall, we launched the Nuveen Lifecycle Income target date series in the United States, a next-generation qualified default investment alternative that combines a simple and familiar target date structure with the opportunity to generate guaranteed lifetime income and help participants cover their living expenses throughout retirement without the risk of outliving their savings. This is the next step in portfolio diversification, ensuring that investors of every stripe can gain access to hard-to-reach and underlying asset classes and strategies that offer better correlation, downside protection, and upside opportunity.
Studying, innovating, and eventually building capabilities like these is how we’ve been able to help multiple generations of investors achieve their financial goals. By constantly adapting our business to offer greater breadth and depth of products, advice, strategies, and service models, we’ve been able to develop a network of partners who share our commitment to meeting the long-term needs of generations of investors, no matter how volatile or uncertain the investment environment might be.