JLS: Higher Interest Rates Can Create Uncertainty
Nuveen Mortgage and Income Fund (JLS) remains a hold, with persistent NAV weakness and a widening discount despite a high 10.5% yield. JLS's earnings struggle to fully cover distributions, and its heavy allocation to long-duration, below-investment-grade securities heightens sensitivity to interest rate and credit risks. Leverage at 22.9% of assets amplifies downside in adverse rate or credit scenarios, while dividend sustainability is questionable given recent earnings shortfalls.
JLS: Mortgages Are Attractive
Nuveen Mortgage and Income Fund offers a leveraged, RMBS- and CMBS-overweight fixed income CEF with a low duration profile. JLS benefits from recent rate volatility, providing attractive risk/reward as mortgage bonds have sold off amid inflation and geopolitical tensions. The fund trades near historical NAV discount midpoints, reflecting market recognition of its strong performance and portfolio management.
