Stock Analysis & Valuation Nuveen New York AMT-Free Quality Municipal Income Fund (NRK)

• Previous Close: $10.17
• Sector Valuation Confidence Level: High

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)	4.04	-60
Graham-Dodd Method	9.08	-11
Graham Formula	3.46	-66

Strategic Investment Analysis

Company Overview

Nuveen New York AMT-Free Quality Municipal Income Fund (NYSE: NRK) is a closed-end fixed income mutual fund managed by Nuveen Investments, Inc., focusing on high-quality, tax-exempt municipal bonds in New York. The fund targets undervalued municipal securities rated Baa/BBB or better, offering investors income exempt from federal and New York state taxes. With an average maturity of 15.98 years, NRK employs a bottom-up fundamental analysis approach to portfolio construction, benchmarking against the S&P New York Municipal Bond Index and S&P Insured National Municipal Bond Index. As part of Nuveen’s extensive municipal bond fund lineup, NRK provides exposure to insured, investment-grade municipal debt, appealing to income-seeking investors in high-tax states. The fund’s strategy emphasizes capital preservation and tax-efficient income, making it a relevant option for conservative investors in the Financial Services sector’s Asset Management - Income industry.

Investment Summary

NRK offers a compelling investment case for tax-sensitive investors seeking stable, tax-exempt income from high-quality New York municipal bonds. The fund’s focus on insured, investment-grade securities (Baa/BBB or better) mitigates credit risk, while its 0.646 beta suggests lower volatility relative to equities. However, its leveraged structure (total debt of $676M against $850M market cap) introduces interest rate sensitivity, a key risk in rising rate environments. The fund’s $0.828/share dividend (current yield ~4.5%) is supported by $77M revenue and $32.5M net income (EPS $0.37), but reliance on municipal bond market conditions may limit growth. Investors should weigh its tax advantages against interest rate and liquidity risks inherent in closed-end funds.

Competitive Analysis

NRK competes in the niche market of state-specific municipal bond CEFs, differentiating itself through Nuveen’s scale and expertise in tax-exempt fixed income. Its New York focus provides geographic concentration benefits for local investors but limits diversification. The fund’s competitive edge lies in Nuveen’s active management, which seeks undervalued insured bonds, and its AMT-free mandate, enhancing after-tax yields. However, its 15.98-year average maturity exposes it to duration risk compared to shorter-duration peers. While NRK’s leverage (debt-to-equity ~0.8x) amplifies returns in stable rate environments, it underperforms unleveraged ETFs like NYF in rising rate scenarios. Nuveen’s brand and distribution network provide an advantage over smaller managers, but passive alternatives (e.g., iShares NY Muni ETF) challenge its fee structure. The fund’s 0.50% expense ratio is competitive for active CEFs but higher than index funds. Its ability to trade at premiums/discounts to NAV adds complexity versus ETFs.

Major Competitors

• iShares New York Muni Bond ETF (NYF): NYF offers passive exposure to New York munis with lower fees (0.25% expense ratio) and no leverage, appealing to cost-conscious investors. However, it lacks NRK’s active management and potential for alpha generation. NYF’s ETF structure provides better liquidity but may have lower tax efficiency due to in-kind creations.
• Nuveen New York Quality Municipal Income Fund (NAN): Another Nuveen-managed CEF with a similar New York muni focus but different portfolio composition. NAN’s longer track record (since 1992) and larger AUM may attract institutional investors, though its performance closely correlates with NRK. Both funds share Nuveen’s credit research resources.
• VanEck High Yield Muni ETF (HYD): HYD competes for tax-averse income seekers but takes on higher credit risk with junk munis. It diversifies nationally, unlike NRK’s state focus. HYD’s 4.5% yield is comparable, but its lower-quality holdings introduce default risk absent in NRK’s insured, investment-grade portfolio.
• Invesco New York AMT-Free Municipal Bond ETF (PZT): PZT is a direct passive competitor with a 0.28% fee and AMT-free mandate. Its index approach lacks NRK’s active sector rotation but provides transparency. PZT’s lower turnover may benefit buy-and-hold investors, while NRK’s flexibility could outperform in volatile markets.