NEA - NEA: Smart Buy For Continued Bounce-Back Muni Market In 2024
2024-04-24 06:23:58 ET
Summary
- The muni bond market is expected to continue its bounce-back in 2024 after a sharp decline in 2022 followed by a small bounce in 2023.
- NEA is the largest CEF NEA managed by the top Muni CEF leader and offers an attractive alternative in Muni investment for income investors seeking for high yield and tax-exemption benefits.
- NEA currently has a 14.5% NAV discount. Its high leverage shows signs of contributing positively to the returns in 2024.
- The dividend increase in 2024 and the insider buy are strong supportive evidence for an interesting total return play in 2024.
I have been reconstructing my income portfolio since the start of the rate-hiking cycle to fight inflation. My attention was led to a few close-end fund CEFs due to the high yields and asset diversification considerations. Last year in 2023, I noticed some interesting opportunities in the Muni bond market, in particular, Muni CEFs were largely oversized in NAV discounts reaching over 10% or more as quoted :
NEA: Smart Buy For Continued Bounce-Back Muni Market In 2024The average municipal-bond closed-end fund has a discount of 10.5 percent, which over the last 25 years would be in ‘the 99th percentile of cheapness.’