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Nuveen's guide to municipal bond investing
Discover tax-exempt income strategies with Nuveen's 125+ years of municipal bond expertise. Download the guide and build a tax-efficient portfolio.
Investor benefits
- Tax-exempt income at the federal level, and often at the state and local level, benefiting high-income earners.
- Enhanced risk management from historically lower correlations to equity and fixed income sectors, to improve overall portfolio diversification.
- Capital preservation and income stability from low default rates and steady cash flows through regular interest payment.
Same yield, different reality: comparing municipal and corporate bond returns after tax
Corporate bond interest is taxed at the federal level, and often state and local levels too. Municipal bond interest generally isn't. That gap can add up quickly, especially in higher tax brackets. See what it's worth at your tax bracket.
Our specialized credit sector analysts research nearly every bond that comes to market, identifying opportunities and risks others might miss.
Why Nuveen for municipals?
More than a century of investing in municipal bond markets has helped Nuveen build the research depth, issuer knowledge and trading relationships needed to navigate a fragmented market on behalf of clients.
Leading the way
Frequently asked questions
Municipal bonds are debt securities issued by state and local governments to fund public projects like schools, roads and hospitals. Interest earned from municipal bonds is generally exempt from federal taxes, and bonds issued within an investor's home state may also be exempt from state and local taxes — a benefit sometimes called triple tax-exempt income.
Nuveen has specialized in municipal bond investing since 1898 and has one of the industry's largest dedicated research teams to help investors maximize tax advantages.
Yes. Municipal bonds have historically shown lower correlation to equities and other fixed income sectors compared to other bond types. Municipal bonds can act as a diversifier alongside both stocks and traditional fixed income. It's worth noting that diversification does not assure a profit or protect against loss.
Municipal bonds are debt securities issued by state and local governments to fund public projects like schools, roads and hospitals. Corporate bonds are debt securities issued by companies to raise capital for various business needs, such as funding expansions, financing operations, or refinancing existing debt.
The biggest differences between the two are: 1) the number of municipal bond issuers and the number of distinct municipal securities is much larger and more fragmented, versus corporates. This can cause inefficiencies and create mispricing; and 2) Municipals bonds create tax-efficiency, because the interest (income) earned from municipal bonds is generally exempt from federal taxes, and bonds issued within an investor's home state may also be exempt from state and local taxes.
Specialized credit research is valuable, since it's harder to track disclosure and credit quality across so many smaller, infrequent issuers of municipal bonds. Nuveen's investment team is built specifically to navigate this complexity.
A taxable-equivalent yield (TEY) shows what a taxable investment would need to yield to match the after-tax return of a tax-exempt municipal bond. Because municipal bond interest is generally exempt from federal taxes, investors in higher tax brackets often need a meaningfully higher taxable yield to achieve the same after-tax result. You can find a TEY calculator on our mutual fund and closed-end-fund product pages.
A state-specific portfolio invests only in bonds issued within an investor's home state, which may help maximize state and local tax savings for residents of high-tax states. A state preference portfolio invests a minimum percentage in home-state bonds while allowing some allocation to out-of-state bonds, which can offer more diversification and potentially faster investment timelines. Availability varies by state and may change without notice.
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1 As of 30 Jun 2026. Nuveen assets under management (AUM) is inclusive of underlying investment specialists. Totals may not equal 100% because of rounding. Personnel as of 30 Jun 2026.
2 Smith’s Research & Gradings announced the annual awards on 03 Dec 2025. The program starts with the formation of Smith’s Blue Ribbon Ballot Committee – comprised of portfolio managers and senior leaders from many of the nation’s largest institutional investment firms. Members of Smith’s Blue Ribbon Ballot Committee are asked to nominate the nation’s leading municipal analysts to the ballot. Once the ballot nominations for the 28 different categories are compiled and verified, the final ballot is sent out to 1,000 institutional investors for voting. The entire process is transparent and the voting increases the democratization of the municipal bond market. Please see https://www.smithsresearch.net/events/smiths-municipalall-star-awards for more information. Used with permission.
Endnotes:
This material is not intended to be a recommendation or investment advice, does not constitute a solicitation to buy, sell or hold a security or an investment strategy, and is not provided in a fiduciary capacity. The information provided does not take into account the specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on an investor’s objectives and circumstances and in consultation with his or her financial professionals.
The views and opinions expressed are for informational and educational purposes only as of the date of production/writing and may change without notice at any time based on numerous factors, such as market or other conditions, legal and regulatory developments, additional risks and uncertainties and may not come to pass. This material may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections, forecasts, estimates of market returns, and proposed or expected portfolio composition. Any changes to assumptions that may have been made in preparing this material could have a material impact on the information presented herein by way of example. Performance data shown represents past performance and does not predict or guarantee future results. Investing involves risk; principal loss is possible.
Institutional separate accounts, separately managed accounts, open-end mutual funds, closed-end funds, interval funds and limited partnerships are different types of investment vehicles with different expense structures and different inflows/outflows and distribution requirements. Income may be subject to state and local income taxes. Capital gains, if any, will be subject to capital gains tax.
Important information on risk
Investing involves risk; principal loss is possible. All investments carry a certain degree of risk and there is no assurance that an investment will provide positive performance over any period of time. Investing in municipal bonds involves risks such as interest rate risk, credit risk and market risk. The value of the portfolio will fluctuate based on the value of the underlying securities. Bond insurance guarantees only the payment of principal and interest on the bond when due, and not the value of the bonds themselves, which will fluctuate with the bond market and the financial success of the issuer and the insurer. No representation is made as to an insurer’s ability to meet their commitments. This information should not replace an investor’s consultation with a financial professional regarding their tax situation. Nuveen is not a tax professional.
Investors should contact a tax professional regarding the appropriateness of tax-exempt investments in their portfolio. If sold prior to maturity, municipal securities are subject to gain/losses based on the level of interest rates, market conditions and the credit quality of the issuer. Income may be subject to the alternative minimum tax (AMT) and/or state and local taxes, based on the state of residence. Income from municipal bonds held by a portfolio could be declared taxable because of unfavorable changes in tax laws, adverse interpretations by the Internal Revenue Service or state tax authorities, or noncompliant conduct of a bond issuer. It is important to review your investment objectives, risk tolerance and liquidity needs before choosing an investment style or manager.
This material is not intended to be a recommendation or investment advice, does not constitute a solicitation to buy, sell or hold a security or an investment strategy, and is not provided in a fiduciary capacity. The information provided does not take into account the specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on an investor’s objectives and circumstances and in consultation with his or her financial professionals.
The views and opinions expressed are for informational and educational purposes only as of the date of production/writing and may change without notice at any time based on numerous factors, such as market or other conditions, legal and regulatory developments, additional risks and uncertainties and may not come to pass. This material may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections, forecasts, estimates of market returns, and proposed or expected portfolio composition. Any changes to assumptions that may have been made in preparing this material could have a material impact on the information presented herein by way of example.
All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such. For term definitions and index descriptions, please access the glossary on nuveen.com. Please note, it is not possible to invest directly in an index.
This information is confidential and must not be made available, published or distributed to any third party without the prior written consent of Nuveen.
Nuveen Asset Management, LLC is a registered investment adviser and an affiliate of Nuveen, LLC.
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