Higher-education municipal bonds have been battered amid the fallout from President Donald Trump’s insurance policies. However, there are shopping for alternatives if you already know the place to look, in response to Nuveen. Trump has focused a number of schools and universities since taking workplace, together with freezing analysis cash and mountain climbing the tax fee on endowments. However, the worst of the headline threat has now handed for higher-ed munis, which characterize nearly 6% of the $4.3 trillion muni bond market, mentioned Dan Close, head of municipals at Nuveen. “Right now, the higher education sector is on sale,” he mentioned. Municipal bonds are typically freed from federal taxes. They might also be exempt from state tax if the holder resides within the state during which the bond was issued. The higher-ed sector had already been fighting declining enrollment. Then, in March, Moody’s downgraded the cohort to destructive from steady attributable to potential coverage adjustments coming from the White House. There has additionally been numerous issuance, with $26 billion in new muni bonds issued within the first half of the 12 months — a 37% improve in comparison with the identical interval final 12 months, Close identified. That contains some taxable munis from universities trying to drum up extra funding. The improve in issuance happened due to the uncertainties round analysis grants, the endowment tax, scholar help and worldwide examine insurance policies, Close mentioned. However, he expects these patterns to normalize as soon as there may be readability on federal insurance policies. Winners and losers While some establishments are struggling, there are others that are in nice form — and have simply been hit by the destructive information, Close mentioned. “If you can navigate and really find those credits where you do have good management, good student demand, good operating margins, good cash flow — we think that those are going to have spread tightening over time and present a very good total return opportunity,” he mentioned. Across the board, public establishments are doing properly because of the broad help they are seeing, Close mentioned. “Some are better than others, but there’s just a rising tide we’re seeing with state coffers being at the highest point that they’ve been in more than four decades,” he mentioned. “The amount of money that continues to be directed towards public higher education continues to improve.” Among the names within the Nuveen Intermediate Duration Municipal Bond Fund are the University of Texas and California State University. The University of Massachusetts is among the holdings within the Nuveen Limited Term Municipal Bond Fund. Close mentioned the names are all buying and selling low cost relative to their intrinsic worth. NUVBX YTD mountain Nuveen Intermediate Duration Municipal Bond Fund 12 months so far. Meanwhile, Close is avoiding non-public colleges that are extremely tuition dependent, haven’t got a STEM program and are going through declining enrollment. Instead, he focuses on people who have scholar demand, excellent working margins, free money stream from endowments and management stability. While the One Big Beautiful Bill raised the tax on endowments to go up to eight%, the ultimate determine was lower than initially thought, Close mentioned. The finish result’s only a handful of establishments shall be impacted by it, he mentioned. “[There are] certain names we think are exceptionally cheap, especially for those Ivy League schools that have the large endowments and that we think can really go in and weather some of the the hits that they’ve taken here over the last couple months,” he mentioned. Names in Nuveen’s muni funds embody Harvard, Princeton, University of Chicago and Texas Christian University.