Laura Cooper

Key takeaways

• The second and third-order effects of the Strait of Hormuz crisis are only beginning to materialise
• Markets have been complacent and are normalising to the conflict
• Geopolitical risk has shifted from episodic noise to a persistent feature of the investment landscape; investors who understand that distinction will be better positioned for what comes next

Revisiting the rulebook: Three months on

Three months ago, we argued that geopolitics had shifted from episodic noise to a structural force for markets. At the time, that was a framework. Today, it is evidence.

Bottom line up top 

Markets were resilient through 2025 not because the underlying order was intact, but because the consequences of its erosion were still unfolding. Investors were not positioned for a world in which assumptions built over decades – institutional credibility, alliance durability and the limits of political shock – would be tested simultaneously. Political change, we argued, moves faster than market repricing – until it doesn’t. The events of late February may have delivered that inflection point.

From risk premium to real disruption

The Strait of Hormuz crisis did not arrive without warning. Escalating Middle East tensions and the fragility of rules-based international frameworks had been structural risks insufficiently priced by markets. What followed confirmed that assessment with force. The conflict has triggered the largest supply disruption in the history of the global oil market, with flows through the Strait collapsing from around 20 million barrels per day, Gulf producers cutting output by at least 10 million barrels per day and Brent surpassing $100 per barrel for the first time since 2022.

The disruption extends well beyond energy with lasting implications: the Middle East accounts for at least 20% of all seaborne fertiliser exports and the crisis is reshaping supply chains in real time across aluminum, LNG, helium, and petrochemicals. More than 44,000 businesses across 174 economies had at least one shipment exposed as of mid-March. The second and third-order effects are only beginning to materialise.

Three fault lines, now visible

The events of the past three months have clarified three structural breaks:

• First, geopolitical risk has become structural rather than episodic. The U.S. continues to fundamentally reshape its economic and security relationships, pursuing a transactional approach and exposing fractures within traditional alliances. The Hormuz crisis is not an outlier; it is an expression of a broader shift toward boundary-testing.
• Second, Europe was inadequately prepared for a scenario in which U.S. support becomes conditional. Europe is heading toward energy scarcity pricing at a time when its strategic autonomy and rearmament plans are still taking shape.
• Third, the central bank playbook is constrained. The inflation impulse of the energy shock arrives simultaneously with a growth drag: a supply-side shock that conventional tools cannot address. A closure removing close to 20% of global oil supplies is expected to lower global real GDP growth by an annualised 2.9ppts in Q2/2026. Central banks cannot produce oil, and when faced with a stagflationary shock, the tools that address inflation worsen the growth outlook.

The investment implications

The case for geographic diversification, scenario weighting and selectivity within asset classes is stronger today than at the start of the year. In practice, we favour floating rate over fixed credit exposures, including senior loans and pockets of private credit over investment grade duration; energy and upstream assets across equities; hard assets and real return profiles; and we remain constructive, albeit selective, on EM sovereigns where strong external balances offer both diversification and carry where traditional haven assumptions are being tested.

An important portfolio consideration is also what markets are pricing, with complacency increasingly evident. Markets are normalising to the conflict, pricing a base case of partial resolution and gradual resumption of flows. Tail risks from a prolonged closure extending into Q3, further attacks on Gulf energy infrastructure, or escalation that draws in additional regional actors remain underpriced. Outcomes aren’t symmetric, and investors positioned for the base case are implicitly short optionality when it is most valuable.

Bottom line

The Strait of Hormuz crisis is not an aberration from the new geopolitical order – it is an expression of it. Markets are transitioning from a world where geopolitical risk was something to price at the margin, to one where it shapes outcomes. Investors who understand that distinction will be better positioned for what comes next.

By Laura Cooper, Global Investment Strategist and Head of Macro Credit

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Laura Cooper

It is no longer just about owning the winners. It is increasingly about avoiding the losers – those with business models most at risk of disruption. The transition started with digital businesses, yet the software selloff is spilling across asset classes – from heavy software exposure in private credit to pockets of public markets as AI disruption risks rise.

Last week, I had the opportunity to speak with several tech and software investors at Nuveen. One theme kept surfacing: investors are no longer asking ‘who benefits from AI?’ but ‘who gets displaced’. And the selloff is changing that opportunity set in real time.

Markets shooting (software) first, asking questions later

Software has been at the centre of the recent repricing. The rapid advance in large language models is changing the cost of building and delivering software, lowering barriers to entry and intensifying competition. This is challenging existing business models, driving a structural shift from subscription (Software as a Service) to consumption-based pricing, and raising questions about the future of the SaaS model itself.

At the same time, markets may be overestimating the speed of that disruption. Enterprises move slowly, workflows are deeply embedded, and switching costs remain high. Forward revenue multiples have compressed from roughly 10x to 4-6x for many software names, and while a re-rating was warranted, the selloff has been indiscriminate.

This is not a ‘sell all software’ moment – but presents an opportunity for security selection. The sector is experiencing necessary price discovery as the market distinguishes between companies with durable models with pricing power and those facing disintermediation.

Finding the winners among the losers

Our investors remain focused on frameworks to identify companies with demonstrable AI integration, strong network effects, and the flexibility to transition pricing models:

Winners: “Companies operating in categories with high determinism and customisation requirements are best positioned – think design software, vertical-specific solutions, and enterprise resource planning systems. At the vendor level, success favors those with strong data and workflow moats, and usage or outcome-based pricing models.”

Losers: “Service-oriented applications, and creative apps with low customisation needs are particularly vulnerable. Those with weak moats, seat-based pricing models, limited AI progress, and closed ecosystems face heightened disruption risk.”

Security selection, not just a software story

Equity markets tend to reprice first while other asset classes lag, creating a window where risk is reassessed. Yet spreads in parts of the broadly syndicated loan market have already widened by 100-150bps, particularly for issuers with heavier software exposure and more aggressive capital structures. Meanwhile, private credit has increasingly been a source of refinancing for capital structures that were of lower quality, creating pockets of risk in the asset class.

As valuations re-rate and equity cushions shrink, loan-to-value ratios rise, raising refinancing risk and creating less margin for error. While vulnerable issuers at the lower end of the credit spectrum might face refinancing challenges if private credit becomes constrained, the broader, higher-quality loan market should remain relatively insulated from direct spillover effects. And it remains to be seen whether private credit appetite for software will change, or they will continue to provide capital but at wider spreads.

Either way, dispersion is likely to increase not only across borrowers, but across managers focused on the durability of business models.

Big picture: where are the opportunities?

AI is not a bubble technology, but that doesn’t mean every AI bet will pay off. There are companies spending significantly on AI that likely won’t see a return. And the transition from focusing on eyewatering capex to the return on investment has already begun – large, scaled incumbents are investing aggressively not only to innovate, but to protect the moats they have already built with the winners still unknown.

From an opportunity standpoint, the infrastructure and cybersecurity subsectors carry the highest ‘perceived AI safety’. The former is underpinned by strong demand driven by data movement, storage, and analytics. And as AI expands the ‘attack surface’, incremental spending in cybersecurity is likely to remain resilient in this relatively unique part of the market.

In contrast, the application layer is most exposed. This is where the user interface sits, where disintermediation risks are highest, and where the shift from SaaS will be felt most acutely.

Still early stage of AI supercycle

For investors, the passive exposure to software is no longer the same bet in was three years ago. The index-level trade has become a stock-picking story. In credit, the same logic applies where selection and credit differentiation matter more now than in recent years.

The AI investment thesis hasn’t disappeared – it’s just evolving. The recent selloff reflects a repricing within a transformative AI cycle, and periods like this tend to create fatter tails: more winners, but also more losers. The opportunity lies in identifying this flip: who will win versus who will lose.

By Laura Cooper, Managing Director, Head of Macro Credit and Global Investment Strategist

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William Huffman

Nuveen, a global asset manager with $1.4 trillion in assets under management1, and Schroders (LON: SDR), a leading provider of active asset management, advisory and wealth management services with $1.1 trillion in assets under management have agreed to the terms of a board recommended cash acquisition (“the Transaction”) by Nuveen for the entire issued and to-be-issued share capital of Schroders for approximately £9.9 billion.

This Transaction will create one of the largest active global asset management firms, with nearly $2.5 trillion of assets under management. The Combined Group will operate with significant scale and capabilities in the world’s largest financial centers with a presence in more than 40 markets in total.

“Through this exciting and transformational step for both of our distinguished firms, we look forward to welcoming Schroders into the Nuveen family. By bringing our complementary platforms, capabilities, distribution networks, and cultures together, we will create an extraordinary opportunity to enhance the way we serve our collective clients through access to new markets, bolstered product offerings, and deeper pools of investment talent,” said William Huffman, Chief Executive Officer, Nuveen. “This transaction is about unlocking new growth opportunities for wealth and institutional investors around the world by giving our leading, differentiated public-to-private platform a broader global presence.”

“In a competitive landscape where scale can help deliver benefits, in Nuveen we see a partner that shares our values, respects the culture we have built and will create exciting opportunities for our clients and people,” said Richard Oldfield, Group Chief Executive, Schroders. “The transaction will significantly accelerate our growth plans to create a leading public-to-private platform with enhanced geographic reach and a strengthened balance sheet. Together, we can create an exceptional opportunity to provide clients with a true breadth of high-quality solutions to meet their evolving needs.”

It is expected that for at least 12 months following the completion of the Transaction, the Schroders group will continue to operate as a standalone business within the wider Nuveen group.Schroders will continue to be led by CEO, Richard Oldfield, who will report to William Huffman, CEO, Nuveen, and become a member of the Nuveen Executive Management Team.

Compelling Strategic Rationale

Nuveen and Schroders have an investment-led, client-centric and collaborative culture with well-matched capabilities across public and private markets. Together, Nuveen and Schroders will design new solutions to meet wealth and institutional clients’ increasingly diverse needs. This will include a breadth of capabilities across equities, fixed income, multi-asset, infrastructure, private capital, real estate, and natural capital, which together with the wealth management business, would provide more ways to build resilient portfolios through a single platform.

“The Combined Group will bring together two successful firms with shared values and highly complementary strengths to create a new global leader in public-to-private investment management. Building on Schroders’ heritage, London will remain at the heart of this enlarged business and the Transaction will deliver an attractive premium in cash to our shareholders, reflecting the value of our business and its future prospects. The board of Schroders is confident that this is the right step for our shareholders, clients and people,” said Dame Elizabeth Corley, Chair of Schroders.

Transaction Details

Under the terms of the Transaction, each Schroders shareholder would be entitled to receive cash consideration of £5.90 per Schroders share at completion for a total of £9.5bn (the “Cash Consideration”). In addition, Schroders shareholders would be entitled to receive and retain dividend(s) of up to 22 pence (in aggregate) per Schroders share prior to completion (“Permitted Dividends”), which coupled with the Cash Consideration values the entire issued and to be issued share capital of Schroders at £9.9bn.

The terms and conditions of the Transaction are set out in a joint announcement released by Nuveen and Schroders in the UK today under Rule 2.7 of the UK Takeover Code (the “Transaction Announcement”).

Commitment to Heritage and Culture

In recognition of Schroders’ position as a preeminent financial institution with a deep-rooted history and strong brand, Nuveen expects that London will serve as the Combined Group’s non-US headquarters and largest office, with more than 3,100 professionals. The Combined Group expects to deliver significant benefits to the UK as a global financial centre, enabling more long-term capital to be channeled into the economy, while reinforcing London’s role in global asset and wealth management.

Timing and Approvals

The Transaction has been unanimously approved by the Boards of Directors of both Nuveen and Schroders and the Schroders Board are unanimously recommending that shareholders of Schroders approve the Transaction. The Schroders Directors who hold Schroders shares have also irrevocably undertaken to vote in favor of the Transaction. The Transaction is currently expected to become effective and close during Q4 2026, subject to the satisfaction or waiver of certain conditions, including the approval by Schroders shareholders and relevant antitrust and regulatory authorities, as set out in full in the Transaction Announcement.

Irrevocable Undertaking from Principal Shareholder Group Trustee Companies

The Schroders’ Principal Shareholder Group Trustee Companies, which comprise four private trust companies which act as the trustees of various trusts settled by certain members of the Schroder family, have entered into irrevocable undertakings to vote in favor of the Transaction at the upcoming Schroders shareholder meeting in respect of their aggregate holding of approximately 41% of Schroders shares.

Advisors

BNP Paribas is acting as financial advisor to Nuveen, with Clifford Chance LLP acting as legal advisor to, Nuveen.

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Harriet Steel

Institutional investors worldwide are recalibrating their investment approaches as three powerful megatrends—artificial intelligence, energy transition, and deglobalization—reshape the global economic landscape, according to preview results from  sixth annual EQuilibrium Global Institutional Investor Survey.

The survey finds that AI has emerged as the dominant force influencing investment strategy, with 63% of investors identifying it as the biggest megatrend impacting their decisions over the next five years. Energy transition ranks second at 40%, followed by deglobalization at 36%.

Each year Nuveen’s EQuilibrium survey reflects the views of the world’s largest investors, examining how evolving perspectives on market, geopolitical and climate-related issues are influencing asset allocation decisions, particularly in private markets. This year 800 institutions from 30 countries were surveyed, representing nearly $17 trillion in assets under management.

“Institutional investors are navigating a pivotal moment shaped by three transformative megatrends: the AI revolution, the energy transition, and the forces of deglobalization,” said Harriet Steel, Global Head of Institutional Distribution at Nuveen. “These aren’t just abstract concepts—they’re driving concrete portfolio decisions. We’re seeing institutions invest heavily in AI infrastructure and energy production, recalibrate regional exposures in response to trade disruptions, and significantly expand their private market allocations. The common thread is that investors are moving decisively to position portfolios for a new investment landscape.”

Nearly All Institutions Investing in AI

The survey results indicate unprecedented institutional engagement with artificial intelligence, with 96% of institutions actively investing in AI-related opportunities. Three-quarters of investors (75%) believe AI will create a profound increase in economic productivity over the next decade.

Investors are directing capital toward cloud infrastructure, computing power and chips, AI model and software development, and energy production to support AI growth. Among investors allocating to AI opportunities, 39% rate energy production and infrastructure as the biggest investment opportunity.

“Virtually every conversation we’re having with institutional investors includes a discussion of the myriad ways to express a view on AI,” said Steel. “What’s evolved in the last 12 months is not just the recognition of AI’s transformative potential, but the sophistication with which investors are approaching it—appetite for exposure to cloud infrastructure and semiconductors remains strong, even as investors are also seeking more direct exposure to the energy production and transmission buildouts required to power this revolution.”

Energy Transition: From Risk to Opportunity

Institutional investors are shifting their perspective on energy and climate, moving from a risk-focused approach to an opportunity-oriented strategy.

“We’re seeing increasing demand for exposure to new energy generation approaches, driven particularly by the global surge in energy demand across many sectors,” said Steel. “At Nuveen, this translates into concrete investment opportunities across both public and private markets—from electric utilities positioned to capitalize on accelerating earnings growth, to private infrastructure investments in clean energy generation, energy storage and the data center buildouts powering AI growth.”

Nearly two-thirds (64%) of institutions agree that projected rapid growth in energy demand is strengthening the opportunity set for clean energy investments. Among impact-focused investors, energy innovation and infrastructure projects rank as the top areas for investment.

Trade, Tariff, Geopolitical Issues Prompting Portfolio Changes

Almost all survey respondents (91%) made portfolio changes due to trade, tariff and geopolitical issues in 2025. Among the investors that reallocated capital by region, more than one-third (36%) increased exposure to Europe, reflecting a strategic shift toward diversification amid heightened uncertainty.

For those reallocating sectors, commonly cited areas for increase were AI-related technology (cloud computing, machine learning, industrial automation), alternative credit and private equity, cryptocurrency/blockchain/digital assets, energy (renewables, semiconductors, utilities), cybersecurity and healthcare (biotechnology, pharmaceuticals, life sciences).

While 74% of respondents agree that 2025 delivered more upside than downside to portfolios, nearly half (44%) also agree that 2025’s unprecedented tariff and trade actions will have long-lasting repercussions on investment strategy. Looking ahead, 48% of investors expect U.S. capital market dominance to decline over the next decade.

Investors’ expectations for rate cuts are divided. Almost half (47%) of respondents expect gradual and steady U.S. Federal rate cuts that will provide a boost to markets, compared with 32% forecasting choppy or unpredictable rate cuts leading to market volatility.  Delayed or paused cuts due to reinflation were forecast by 12% of respondents whereas 8% indicated they expect accelerated cuts due to concerns about a deeper economic slowdown.

Acceleration & Diversification into Private Markets

About eight in 10 investors (81%) are planning to increase allocations to private markets over the next five years, with more than half (51%) planning to increase private allocations in their portfolios by five to 15 percentage points. Private infrastructure, private credit and private equity are top picks for alternative/private investment in the next two years, with 43% of institutions planning to increase allocations to private infrastructure and private credit, followed closely by private equity (42%).

“The scale and pace of institutional capital flowing into private markets continues to be substantial,” said Steel. “Institutional investors are taking full advantage of the powerful combination of benefits offered by private markets: diversification away from public market uncertainty, enhanced income generation, and the potential for improved risk-adjusted returns. With new technology making it more efficient to integrate private market investments into existing portfolios, we expect this structural shift to accelerate, particularly as investors seek resilience in an environment of lingering volatility.”

Even as diversification has emerged as a crucial private-market portfolio benefit, nearly half (46%) of institutions agree that diversification within their alternative credit allocation is a top priority over the next five years.

The top choices for investment within private fixed income include private investment grade corporates (44%), private investment grade infrastructure debt (44%) and private asset backed securities (ABS) (40%).

Nearly half of investors (46%) plan to add one to two new types of alternative credit investments over the next two years and 15% plan to add three or more.

In addition to increasing diversification within private markets, investors are looking for diversification outside of developed markets. Of investors planning to increase allocations to public below-investment grade fixed income, 48% are planning to increase allocations to emerging market debt, compared with 27% last year.

Read the Survey,  (available in March 2026).

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Saira Malik

1. Don’t bet against the US

One of the main questions on investors’ minds is whether the AI-driven U.S. equity surge has created a bubble. Additionally, tariffs and the corresponding rise of deglobalization have prompted some investors (particularly those outside the U.S.) to reduce U.S. exposure. But we think U.S. large caps still have room to run. U.S. megacap tech companies may have less-than-clear monetization timelines around some aspects of AI profitability, but we think investors will continue to reward AI-related capex spending, which shows no sign of slowing
down in the U.S. (Figure 2).

Outside of the U.S., other global equity markets appear cheaper, but we see no catalyst for a leadership shift. And beyond equities, we think stronger relative economic growth, favorable tax and regulatory policies and a diversified economy offer compelling U.S. opportunities across such areas as private credit, private asset-backed finance and private investment grade bonds.

2. Alternative credit and private equity should be core allocations

While global fixed income remains attractive, we’re wary of duration risk and credit spread
tightening. At the same time, we think many (if not most) investors are underweight private markets and could benefit from taking on liquidity risk to seek enhanced returns, income and diversification. As such, we encourage investors to seek out alternative credit sectors beyond traditional fixed income benchmarks, including senior loans, collateralized loan obligations, public and private securitized assets, real estate and infrastructure debt and Commercial Property Assessed Clean Energy (C-PACE) financing.

Private credit headlines question whether the market is oversaturated or cracking. We see issues with underwriting and deal structure in riskier segments, but strong opportunities remain, particularly in middle-market direct lending. Selectivity and partner choice will prove critical – rising tides will no longer lift all boats. Deal structure and covenant protections will matter more.

Private equity also shows promise. Lower interest rates should spur M&A activity, and tougher fundraising means experienced managers are deploying capital. We favor senior over junior capital and prefer secondary markets with single-manager structures.

3. Municipals may be at the forefront of a new bull market

Throughout 2025, municipal prices lagged despite strong balance sheets, solid credit quality and low defaults. That has started to change over the last couple of months as municipal prices have begun to rally. We believe munis continue to offer value. As supply eases and
demand rises, supportive interest rates and strong fundamentals could continue to power
municipal bonds forward.

With municipal yield curves steeper than Treasuries, investors may be well compensated for duration risk. We see compelling opportunities across both high grade and high yield municipals.

4. The real estate rebound is just getting started

After years of falling values, oversupply and weak demand, 2025 saw values rebound and supply contract. We expect demand should follow.

For now, real estate markets are being driven by rising income returns. Capital appreciation hasn’t materialized yet, but we expect that will rise as well, providing another tailwind. The office sector remains under pressure, but medical office, grocery-anchored retail and affordable housing offer notable opportunities.

5. Look for the “second derivative” trades from the AI book and energy revolution

Megacap tech and data centers led early AI gains. And while we still see opportunities there, we think investors should also look for the secondary and future implications of these trends.

Other infrastructure investments such as utilities, battery storage and energy transmission look compelling, as detailed in our “best ideas” section. AI also creates direct or indirect opportunities in select asset-backed securities, real estate and municipal bonds tied to infrastructure buildouts. Despite U.S. political headwinds, the global shift toward renewables and energy efficiency continues as diverse power sources become essential.

We also think investors should pay attention to broader, longer-term AI and energy trends and risks. Key issues include upgrading the power grid, the intersection of data center growth with water scarcity, and AI’s impact on employment and corporate governance.

By Saira Malik, Head of Equities and Fixed Income & Chief Investment Officer

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Andrew Kleinig

Nuveen, one of the largest asset managers globally with over USD$1.4 trillion AUM, has extended access to its Global Cities REIT strategy to Australian wealth investors.

The access comes via the firm’s Australian-domiciled feeder fund, Nuveen Global Cities Private Real Estate Fund (“The Fund”), with a recently registered product disclosure statement (PDS).

Currently available via platform providers including Netwealth, Mason Stevens, CFS, and Praemium, the Fund now offers its existing Australian wholesale investors the opportunity to invest alongside major Australian private banks and wealth managers, and ultimately Nuveen’s parent company, TIAA, which has invested over USD$300 million of its own capital in the strategy.

The Fund (invested via Nuveen GCREIT, its US-domiciled master fund) is a perpetual-life investment vehicle, which seeks to provide favourable long-term risk-adjusted returns, current income and capital preservation through investments in global private commercial real estate.

As of 31 October, 2025, the Nuveen GCREIT has a total asset value of approximately USD$3.0 billion. Assets are diversified across a range of asset types including industrial, healthcare and retail, and geographies, with allocations spanning North America, Europe, and Asia-Pacific.

From over 4,000 cities worldwide, Nuveen has identified the top 2% of cities through a detailed filtering process centred on structural megatrends as a guide for investment, which Nuveen believes will deliver superior, risk-adjusted returns.

The Fund also includes a hedge against USD foreign exchange (FX) exposure, helping to mitigate currency risk for Australia-based wholesale investors.

Richard Kimble, Managing Director, Portfolio Management Americas, at Nuveen said: “Our strategy is focused on providing global and sector diversification by targeting commercial real estate in the cities that we believe are best positioned to benefit from demographic and structural megatrends, such as urbanisation, technological innovation and the rise of the knowledge economy.

“We’re pleased to bring this strategy to Australian wholesale investors, providing access to a differentiated portfolio bringing long-term capital appreciation and resilient income through market cycles.”

Andrew Kleinig, Head of Australia at Nuveen, said: “Access to the benefits of global real estate has traditionally been reserved for institutional investors. Through the Nuveen Global Cities Private Real Estate Fund, we’re continuing to democratise access to high-quality, alternative investment strategies, for Australian wholesale investors. With fundamentals turning positive across key global city markets, we believe this is an opportune time to bring the strategy to Australia’s wealth audience.

“We’re seeing growing demand from family offices, private wealth advisers, and high-net-worth individuals for diversified, lower-volatility solutions with strong risk-adjusted returns. Backed by Nuveen’s global scale, deep sector expertise, and long-standing track record in real assets, the Nuveen Global Cities Private Real Estate Fund is well positioned to meet that demand.”

The Fund is an Australian registered investment scheme. Channel Investment Management Limited (AFSL 439007) is the trustee and manager of the Fund.

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Andrew Kleinig

Nuveen, one of the largest asset managers globally with over US$1.3 trillion AUM*, has reached second close of its commingled Australian commercial real estate debt strategy with commitments of over A$650 million.

Canada Pension Plan Investment Board (CPP Investments), through its subsidiary CPPIB Credit Investments Inc., invested A$300 million, joining Teachers Insurance and Annuity Association of America (TIAA) and Temasek as strategic partners of Nuveen for this strategy. Total AUM are expected to exceed A$1 billion including capital approved for co-investments.

The strategy is already more than 40% deployed via committed loan investments focusing on institutional senior and junior loans secured by prime real estate in Australia. Preferred sectors for the strategy are industrial / logistics and residential, with a selective approach to retail, office and alternatives across major cities in Australia.

The strategy leverages both Nuveen Real Estate’s global debt platform, which currently has over 55 dedicated specialists, and the team of more than 60 at Nuveen Real Estate in Asia. The strategy is led by Dugald Marr, Nuveen’s Head of Debt Australia and New Zealand, and the support of an experienced team with a long track record of originating and structuring high-quality loan investments in this market.

Investments are also aligned to Nuveen Real Estate’s comprehensive responsible investment processes and ESG factor analysis. This includes waste reduction and energy consumption, climate risk analysis and social aspects with the ability to structure Green Loans or Sustainable Linked Loans where applicable to incentivise ESG targets on behalf of clients.

The investment comes at a time when Australian commercial real estate debt offers the potential for a compelling blend of stability, attractive yields, and strong collateral protection, all of which are increasingly important to investors concerned about global volatility.

Australia’s mature market, supported by robust economic foundations, strict regulatory requirements for banks and the need for more alternative capital sources provides a good foundation for long-term investment in this space.

The strategy will continue to focus on repeat institutional borrowers, conservative lending parameters and prime assets in sectors that benefit most from Australia’s high population growth and limited supply.

Andrew Kleinig, Head of Australia and the Global Client Group for South East Asia at Nuveen, said: “This is another milestone for the strategy. With CPP Investments’ commitment, we will continue our focus on strategic, in-depth partnerships with the highest calibre of investors. We are excited to work with a like-minded partner who also shares a high conviction on the asset class. CPP Investments has provided significant value-add as a strategic investor, ensuring long-term success and growth of the partnership. It showcases Nuveen’s pedigree in real estate investment and our ability to bring regionally tailored solutions across both equity and debt platforms. We believe Nuveen’s offering across real assets more broadly is well-positioned to help clients across Asia navigate volatility alongside managing their responsible investment goals.”

Raymond Chan, Managing Director & Head of APAC Credit at CPP Investments, said: “Australia is one of our key markets in Asia Pacific and this transaction marks an important milestone for our credit strategy in the region. The investment builds upon our extensive market research and insights from our successful investments in Australia. Leveraging Nuveen’s strong local network and capabilities, this partnership enables us to tap into attractive real estate debt investments in Australia and further augment our credit program in the region. These opportunities offer stability and attractive yields amid global volatility, contributing to long-term returns for the CPP Fund.”

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Chad Phillips

Nuveen, the investment manager of TIAA, announced today that Chad W. Phillips will serve as Global Head of Nuveen Real Estate, effective immediately, as the firm activates long-standing succession plans following Chris McGibbon’s decision to retire after nearly 25 years of service.

In this role, Mr. Phillips will be responsible for $141 billion in assets under management of commercial real estate equity and debt investments extending across 22 countries globally. He will also chair the Nuveen Real Estate Global Executive Leadership Team, which oversees the platform’s strategic initiatives.

With nearly 25 years of experience in all facets of real estate investing and portfolio management, Mr. Phillips joined Nuveen in 2019. Most recently, he led a global team of dedicated sector specialists that focus on workplace, healthcare, retail and mixed-use investments, overseeing the strategy, performance, and day-to-day investment and fundraising activities across those sectors. He graduated with a B.A. from Davidson College and a master’s degree in real estate from Georgetown University.

“Chad is known for his leadership style, investment expertise and consistent commitment to client service,” said Mike Sales, Chief Executive Officer of Real Assets at Nuveen. “I have every confidence he will maintain our drive for excellence as he guides the platform into the future.”

In keeping with his decades-long commitment to the best interests of clients and colleagues, Mr. McGibbon will ensure a smooth transition, remaining with the firm until his retirement on June 30, 2025.

“Over the course of nearly 25 years with TIAA and Nuveen, including the last six years as Global Head of Nuveen Real Estate, Chris has worked tirelessly to grow and transform our real estate business, which is now a top five global player,” said Mr. Sales. “His vision, dedication to clients, focus on investment performance and support of our top talent will leave a lasting impact on our real estate business.”

With over 90 years of real estate investing experience and more than 750 employees dedicated to real estate in more than 30 cities throughout the U.S., Europe and Asia Pacific, Nuveen Real Estate is one of the largest real estate investment managers in the world.

“It’s a privilege and a pleasure to take on the leadership of Nuveen Real Estate, a dynamic platform that combines deep sector expertise with the advantages of our size and scale,” said Mr. Phillips. “Focusing on our clients’ objectives will remain our foremost priority as we continue building our platform’s reputation for innovation through the expertise and hard work of our industry-leading teams.”

“I’m incredibly proud of the platform that we’ve built and confident that Nuveen’s real estate business is in very good hands with Chad at the helm,” said Mr. McGibbon. “The global leadership position that the platform has achieved is a testament to the strength of our team and their constant dedication to our investors.”

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Saira Malik

Holiday cheer or new year drear: What will December bring?

For consumers, there are 16 shopping days until Christmas, and for investors, just 12 trading days. In either case, the holiday season is in full swing, and like countless children around the world wishing for something special from jolly old Saint Nick, equity markets are hoping the U.S. Federal Reserve will bring them a comfy-cozy interest rate cut (size 25 basis points, please) at next week’s Fed policy meeting. Market odds currently favour just such a move.

But while equity markets are exuding holiday cheer as they trade at or near all-time highs, public fixed income investors appear more reserved, preparing for a higher-for-longer interest rate environment as the bond yield backup that followed the Fed’s first rate reduction in September remains intact. Unexpected economic resilience in the wake of that cut makes it difficult to divine the direction and pace of monetary policy. Last week’s release of consensus-topping U.S. nonfarm payrolls for November offered the latest evidence of labour strength, as job creation rebounded from a weak October marred by disruptive hurricanes and worker strikes. Meanwhile, wage growth remained steady at +4.0% year-over-year.

On balance, we think investors needn’t be overly concerned that the Grinch or Scrooge will derail the Fed’s sled this December. It’s also worth noting that the current level of the real fed funds rate is not an outlier relative to history (Figure 1). So even if a beloved flying woodland creature with a storied illuminative nose were waylaid, this investment season still offers sound portfolio allocation ideas that can counter the potential chill of a higher-for-longer rate environment.

Portfolio considerations

The U.S. economy is approaching 2025 on solid footing, with GDP growth above expectations and the employment market remaining resilient. We expect the Fed will continue its easing cycle, but at a slower pace than markets previously anticipated. A milder and more protracted decline in interest rates means fixed income investments may not benefit much from capital appreciation in the near term. Against that backdrop, our fixed income positioning for next year is focused on four themes:

1. Current yields are near their highest levels in more than 15 years. Higher base rates have significantly enhanced income potential, with yields of about 6% or more for investment grade plus sectors such as preferred securities and securitized assets, including asset-backed securities (ABS) and commercial mortgage-backed securities (CMBS) (Figure 2).
2. Short- and long-term rates will be higher for longer. That makes exposure to shorter-duration, floating-rate instruments such as senior loans — currently yielding 8.5% — a compelling choice, especially given their sound credit fundamentals. Like senior loans, ABS are also relatively low duration, in addition to providing attractive yields. Also worthy of consideration are esoteric securities backed by nontraditional assets, offering a spread between 75 and 125 basis points in yield compared to short-maturity corporate bonds.
3. Balance duration risk with credit risk. Within investment grade categories, we are less positive on corporates, where duration is much longer than in other fixed income sectors. In contrast, preferred securities — in particular, the $25 par segment — offer nearly 1.5% of yield per year of duration. Preferreds also look well-positioned for 2025, as potential deregulation and an expected pickup in M&A (mergers and acquisitions) activity could bode well for banks, the largest issuer of preferreds.
4. Position for volatility. In the below-investment grade space, we favour an up-in-quality approach. Within senior loans, we find exposure to BB and B rated issues particularly attractive. BB rated loans, for example, have a healthy interest coverage ratio of 4.X, according to Bloomberg.

By Saira Malik, Head of Equities and Fixed Income, Chief Investment Officer

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Dugald Marr

Nuveen, one of the largest asset managers with over $1.2tn AUM, has closed its first commingled Australian commercial real estate debt strategy with anchor investments of over AU$400M from the Teachers Insurance and Annuity Association of America (TIAA) and Temasek, a global investment company headquartered in Singapore. These commitments are expected to grow via additional investments from other global investors who are currently progressing due diligence.

The strategy is focussing on institutional senior and junior secured real estate loan investments in Australia. It primarily will look to the industrial, logistics and residential sectors, with a selective approach to retail, office and alternatives across major cities in Australia.

The strategy leverages both Nuveen Real Estate’s global debt platform, which currently has over 55 dedicated specialists, and the 60+ team at Nuveen Real Estate in Asia. The strategy is led by Dugald Marr, Head of Debt Australia & New Zealand, together with an experienced team who have a long track record of originating and structuring high-quality loan investments in this market. The team has already secured a large seed loan portfolio and pipeline with the backing of TIAA for the benefit of current and future investors.

Investments will also be influenced and aligned to Nuveen Real Estate’s comprehensive responsible investment processes and ESG factor analysis. This includes waste reduction and energy consumption, climate risk analysis and social aspects with the ability to structure Green Loans or Sustainable Linked Loans where applicable to incentivise ESG targets on behalf of its clients.

Dugald Marr, Head of Debt – Australia at Nuveen Real Estate, said: “We believe investment in Australian commercial real estate debt offers investors a compelling blend of stability, attractive yields and strong collateral protection.”

“Australia’s mature market, supported by robust economic foundations, strict regulatory requirements for banks and the need for more alternative capital sources provides a good foundation for long-term investment in this space. Our focus is institutional borrowers, conservative lending parameters and prime assets or projects in sectors that benefit most from Australia’s high population growth and limited supply.

Those market fundamentals and strategy, coupled with Nuveen Real Estate’s extensive real estate debt platform, presents an enticing opportunity for institutions to diversify their portfolios whilst looking to achieve stable returns. Through continued partnerships with like-minded clients, we are excited to continue taking advantage of opportunities in Australasia and beyond.”

Gracee Teo, Head of South East Asia Institutional at Nuveen, said: “This milestone for the strategy, and partnership with such high calibre investors in the region, truly showcases Nuveen’s pedigree in real estate investment and our ability to bring regionally tailored solutions across both equity and debt platforms. We believe Nuveen’s offering across real assets more broadly is well-positioned to help clients across Asia navigate volatility alongside managing their responsible investment goals.”

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