Tax-Exempt Municipal Debt Funds

About Tax-Exempt Municipal Debt

Tax-exempt municipal bonds are debt issued by a state, city, or other municipality for general governmental needs or to finance special projects. These municipal bonds pay interest that is free from regular federal income tax, and state-specific bonds can provide residents of those states with income free from state and, in some cases, local income taxes as well.* Tax-exempt municipal bonds can be an advantageous alternative to taxable investments, particularly for investors in higher tax brackets. To make a fair comparison between a tax-free investment like a municipal bond and a taxable investment, one should adjust the tax-free investment's yield to account for money saved in regular federal, and sometimes state, income tax.

* Interest on out-of-state bonds and dividends paid by national funds may be subject to state and local taxes. Income may also be subject to the Alternative Minimum Tax.

About Nuveen Tax-Exempt Municipal Debt Closed-End Funds

Nuveen offers over 25 national tax-exempt municipal bond closed-end funds, and over 70 state-specific funds. Municipal Closed-End Funds can potentially help you balance your desire for income and growth by:

  • Meeting current expenses with monthly tax-free income;
  • Potentially realizing attractive, long-term, after-tax total returns;
  • Diversifying your income portfolio;
  • Reducing the amount of your investment income subject to taxes.

The Tax-Free Advantage

  Tax-Free Yield
  4% 5% 6% 7%
Tax Rate Taxable Equivalent Yield
25% 6.00% 6.67% 7.33% 8.00%
28% 6.25% 6.94% 7.64% 8.33%
33% 6.72% 7.46% 8.21% 8.96%
35% 6.92% 7.69% 8.46% 9.23%

You can see you would need to earn much more from a taxable investment to match a municipal bond's after-tax yield. For instance, if your fund is yielding 5.00% tax-free and your tax rate is 28%, you would need a taxable investment to yield 6.94% to match the same after-tax cash flow. (This chart is for illustrative purposes only and is not intended to reflect past or predict future performance for any particular investment.)

Nuveen's Municipal Bond Closed-End Funds



Investor Profile

Are these CEF's right for you?
The features and investment objectives of these funds might be especially appealing to investors seeking:
  • Potential for attractive, monthly tax-free income
  • Diversification of a portfolio otherwise comprised of taxable fixed-income and equity securities
  • Reduction of the amount of investment income subject to taxes.
What are potential risks?
  • Municipal bond fund income may be subject to state and local income taxes and the alternative minimum tax. Capital gains, if any, will be subject to capital gains tax.
  • Municipal bonds are subject to interest rate risk, or the risk that the bonds will decline in value because of changes in market interest rates.
  • Municipal bonds are also subject to call risk, and credit risk.

There are risks inherent in any investment, including market risk, interest rate risk, credit risk and the possible loss of principal. There can be no assurance that fund objectives will be achieved. Closed-end funds frequently trade at a discount to their net asset value.

See our privacy policy, important legal information and our business continuity plan summary. The content of this site, including but not limited to the text and images herein and their arrangement are Copyright by Nuveen Investments, 333 W. Wacker Dr., Chicago, IL 60606. Funds distributed by Nuveen Securities, LLC. Investor line: 1-800-257-8787. The information on this website is intended for U.S. residents only.

The information provided does not constitute a solicitation of an offer to buy, or an offer to sell securities in any jurisdiction to any person to whom it is not lawful to make such an offer.