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PIMCO New York Municipal Income Fund: The Premium Has Been Wiped Away


  • PNF now trades at a slight discount to its net asset value (NAV), a compelling entry point.
  • The fund has enough undistributed net investment income (UNII) to cover almost four months of distributions.
  • I believe the late January, early February drop was too steep, and expect the fund to recover near-term.

Main Thesis

The purpose of this article is to explain why I believe the New York Municipal Income Fund (NYSE:PNF) is an attractive investment option at its current market price. The fund has seen a steep drop in 2018, but I believe that it is largely unwarranted. The drop has brought PNF down to a very reasonable valuation, trading at a slight discount to its NAV, which gives investors a cheap entry point in to a fund that normally trades at a premium. Furthermore, while income tax rates have dropped, they remain at a level where earning tax free income from municipal bonds is still a lucrative strategy. Finally, the fund's UNII figures are largely positive, giving me reasonable comfort the stated distribution is safe.


First, a little background about PNF. The fund invests at least 90% of its net assets (and at least 80% of its net assets plus any borrowings for investment purposes) in municipal bonds that pay interest that is exempt from federal, New York State and New York City income tax. It also seeks to be "AMT-free" by avoiding bonds generating interest that may subject individuals to the alternative minimum tax. Currently the fund is trading at $11.69/share and pays a monthly distribution of $.057/share, which translates to an annual yield of 5.85%. Year to date, the fund has come under enormous pressure, and it has given investors a negative total return close to 9% when I last reviewed the fund in December. While my previous timing on this fund was completely wrong, I truly feel its recent troubles have been overblown, and would look at these lower share price levels as a great entry point. Despite some headwinds in the municipal bond market, largely due to tax reform, I think PNF is a quality fund that will bounce back, and I

This article was written by

Dividend Seeker profile picture
CEF/ETF income and arbitrage strategies, 8%+ portfolio yields

I've been in the Financial Services sector since 2008, which unsurprisingly gives me an invaluable insight in how markets can turn. I was a D1 athlete in college (men's tennis), where I studied Finance. I also have my MBA in Finance.

My readers/followers can trust that I won't pump any investment nor discuss a topic I don't genuinely follow and research. In that spirit, I list my portfolio here for transparency

Broad market: VOO; QQQ; DIA, RSP



Dividends: DGRO; SDY, SCHD

Municipals/Debt Funds: NEA, PML, PDO, BBN


Cash position: 30%

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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