Nuveen is merging eight closed-end funds down to two and this will greatly benefit its Dividend Advantage Muni Fund 2 (NXZ) shareholders, said James Robinson, portfolio manager of the Robinson Tax Advantaged Income Fund (ROBAX).
Nuveen's Dividend Advantage fund has returned 2.6% since the start of the year through the end of October, according to fund-tracker Morningstar. The discount on this fund is 12.7%, compared to a three-year average discount of 10%.
"We believe that this merger, once it is concluded, will effectively reduce that discount to a more normalized level for the space, closer to 6%," said Robinson.
The Robinson Tax Advantaged Income Fund, meanwhile, is up 1.4% year-to-date, according to Morningstar.
A second closed-end muni bond fund that Robinson is also bullish on is Eaton Vance Municipal Income Trust (EVN) - Get Eaton Vance Municipal Income Trust Report , which has returned 2.6% as of the end of October. The premium on the Eaton Vance fund is 1.1%, compared to a three-year average premium of 3.7%.
"It deserves that premium. Its actual 10-year average premium is closer to 7%," said Robinson. "We own it around net asset value and we think ultimately it will fetch a premium, because of the superior performance."
MFS Municipal Income Trust (MFM) - Get MFS Municipal Income Trust Report is a third closed-end muni bond fund that Robinson is positive on. The fund returned 3.4% since the start of the year through Oct. 31. The discount on MFM is 11%, compared to a three-year average discount of 6.8%.
Finally, Robinson is a fan of BlackRock Investment Quality Muni (BKN) - Get BlackRock Investment Quality Municipal Trust Inc. Report , which lost 2.7% in value this year leading up to the end of October. The discount on the BlackRock fund is 6.5%, compared to a three-year average discount of 2.3%.
"It's been beaten up quite a bit, along with every other fund in the space, and we think it's poised to do well here," said Robinson.