Investors looking to boost their portfolio should consider allocating some funds to U.S. senior loans, according to Nuveen. The assets are debt instruments issued by well-known companies, like American Airlines and Burger King-parent Restaurant Brands , that are considered below investment grade. They are structured and syndicated by banks to large groups of lenders, such as mutual funds and institutional investors. Senior loans — which are also referred to as syndicated loans, floating rate loans or bank loans — typically have floating interest rates tied to the Secured Overnight Financing Rate (SOFR). These days, those yields can top 8%. The Bloomberg U.S. Leveraged Loan Index, which has a coupon of 7.99%, currently has a yield to maturity of 8.5%, and a yield to 3-year of 8.63%, Nuveen pointed out.
