Nuveen plans second preferred and convertible fund

New York, May 7 - Nuveen Investments said it plans a second closed-end exchange-traded fund that will invest in taxable preferred and convertible securities.

The first fund, brought to market in March, was an initial $1.32 billion in size, with a potential to increase to $1.51 billion through exercise of the greenshoe and more than $2 billion through leverage. As of May 1 it had $1.4 billion in net assets.

"Building on the success of our first fund specializing in a blend of preferred and convertible securities, we are pleased to offer investors another option designed primarily to provide attractive current income," says Bill Adams, executive vice president, Nuveen Investments, in a news release. "In addition, the fund's convertible securities allocation offers investors the potential for some additional total return when the stock markets recover."

The new fund, called Nuveen Preferred and Convertible Income Fund 2 will have Nuveen Institutional Advisory Corp. as adviser, responsible for determining the fund's overall investment strategy, including the allocation of assets to preferred securities, convertible securities and other debt instruments.

The initial allocation will be approximately 60% investment-grade fully taxable preferred securities, 30% convertible securities and 10% other debt instruments including high-yield debt.

Spectrum Asset Management, Inc., a specialist in preferreds with $7.7 billion in assets under management, will manage the allocation to preferred securities.

Froley, Revy Investment Co., Inc., a specialist in the management of convertibles with $2.5 billion in assets under management, will manage the allocation to convertibles.

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