Igor Kutyaev has been reconstructing his income portfolio to fight inflation by investing in close-end funds (CEFs) and municipal bond CEFs (Muni CEFs). He identified Nuveen AMT-Free Quality Municipal Income Fund (NEA) as a potential investment candidate due to its high yield, asset diversification, and tax-exempt feature. NEA is the largest Muni bond CEF managed by Nuveen Investment Manager, a trusted closed-end fund provider. The fund has a solid quality construction with 75% of its holdings rated A or above and a relatively low concentration of its top holdings. NEA’s high leverage of 39.18% presents a risk, but it also contributes to its high returns. The current market conditions favor NEA as a total return play in 2024. The NAV discount is at a historical low, the Muni bond yield is attractive, and the US economy remains resilient. Kutyaev expects the Muni Bond Market to continue its bounce-back in 2024. NEA is an attractive alternative in Muni market investment for investors seeking high-yield and tax-exempt benefits. He is actively watching the dips to pick up more NEA shares and expects a good total return in 2024. However, investors should be aware of the risks associated with NEA’s high leverage, including vulnerability to market pullbacks and the potential impact of rising inflation.
NEA: A Total Return Play in the Muni Bond Market for 2024
