John Miller will step down as the head of Nuveen’s municipal-bond investments, ending a nearly three-decade career at the money-management firm where he oversaw $188 billion and ran the largest fund focused on the riskiest state and local government securities.
The departure of the 56-year-old executive was announced along with Nuveen’s settlement of a years-long legal battle with Preston Hollow Community Capital, a lender that accused Miller of seeking to blackball it on Wall Street to head off a competitive threat. The terms of the settlement weren’t disclosed.
Miller, who joined Nuveen in 1996, cut a high profile in the usually staid municipal-bond business as his bets on the riskiest securities generated outsized returns and drew billions of dollars into his flagship fund during a period of low interest rates. Nuveen’s $18.6 billion high-yield fund is known for its concentrated bets on government debt backed by projects such as the American Dream mall and amusement park in New Jersey’s Meadowlands and the privately run Brightline passenger railroad in Florida.
Because of the high yields on the bonds and the fund’s use of leverage to boost returns, the fund was among the best performers during market rallies. Over 10 years, the average annual return of Nuveen’s high-yield fund was 4.125%, second only in the category to the Invesco Rochester Municipal Opportunities Fund, according to data compiled by Bloomberg.
But it was also vulnerable to selloffs like the pandemic-induced rout of March 2020, when Nuveen’s parent, TIAA, bought $1.1 billion of shares in the high-yield fund after a mass exodus by investors, allowing it to avoid selling assets into a fire sale. It was also battered last year when the Federal Reserve’s aggressive interest-rate hikes hammered high-yield municipal bonds with the deepest losses since the credit crash of 2008. Nuveen’s high yield fund lost 15%, underperforming 77% of its peers, according to data compiled by Bloomberg.
Miller, who has headed the municipal investment team since 2007, will serve as a portfolio manager until June. Dan Close, who has been running Nuveen’s taxable muni business, will succeed Miller as the head of its entire municipal-finance team.
“I am deeply grateful for my years at Nuveen and retire with a profound sense of pride,” Miller said in a statement distributed by the company.
Miller’s boyish looks and Midwestern demeanor belied his status as a fierce competitor, as suggested by filings in a four-year legal battle with Preston Hollow. The Dallas-based municipal lender had made inroads in the high-yield municipal market by purchasing entire debt offerings from issuers like Roosevelt University in Chicago, posing a threat to Nuveen’s ability to secure relatively rare junk or unrated bonds for its fund.
The conflict was behind lawsuits filed by Preston Hollow alleging that Miller tried to intimidate broker dealers into cutting off business with the smaller firm.
Preston Hollow subpoenaed Wall Street’s biggest bond dealers including JPMorgan Chase & Co. and Goldman Sachs Group Inc. to obtain their communications with Nuveen about the rival. In a transcript of a phone call to Goldman Sachs Group Inc. disclosed in the court case, Miller said that firms had to choose who it would do business with, Nuveen or Preston Hollow. Preston Hollow also alleged that Nuveen and Miller defamed it by saying it participated in illegal deals and charged borrowers excessive rates.
On the witness stand in Delaware Chancery Court, Miller testified that that he was only “blustering” when he told bankers and other bond-market players to stop doing business with Preston Hollow.
A Delaware judge in 2020 ruled that Nuveen illegally interfered with Preston Hollow’s business, but damages weren’t available in the case. Preston Hollow sought damages in a separate defamation case in Delaware, a claim that was dismissed and appealed in 2022. Preston Hollow also filed antitrust litigation in federal court in Manhattan.
As part of the settlement, Nuveen will become a “significant minority investor” in Preston Hollow through an investment that is designed to advance the lender’s strategy of directly sourcing and structuring municipal financing deals. The size of Nuveen’s investment and other terms of the settlement weren’t disclosed.
“This timely and targeted investment by Nuveen in PHCC signifies a new era of cooperation between our firms,” Jim Thompson, Preston Hollow’s Chairman and CEO, said in a statement. “We’re looking forward to a mutually productive relationship that will benefit not only our two firms but the broader municipal finance market as well.”
A Columbus, Ohio, native, Miller earned his undergraduate degree from Duke University before obtaining a master’s degree in economics from Northwestern. He worked first as an actuary before switching to investment management by joining Chicago investment advisory firm C.W. Henderson & Associates. He started at Nuveen as a credit analyst, impressing higher-ups with his knack for evaluating borrowers who sell corporate-like debt through municipal agencies.
With Miller’s departure, Nuveen said it will bolster the portfolio management team for 10 of its 60 muni-bond funds that Miller helped manage, including the Nuveen High Yield Municipal Bond Fund.
Close, 47, began his investment career in 1998. He has extensive portfolio management experience in both tax-exempt high-yield and investment-grade municipals, according to Nuveen’s statement. Close will manage the high-yield fund with Stephen Candido.
“Dan’s contributions have been crucial to the advancement of Nuveen’s municipals business,” William Huffman, the president of equities and fixed income for Nuveen, said in a statement. “We’re also celebrating John’s incredibly successful career.”