Nuveen Select Tax-Free Income Portfolio (NXP): Holdings and Taxes

The Nuveen Select Tax-Free Income Portfolio (ticker: NXP) is a closed-end fund that invests primarily in investment-grade municipal bonds and pays monthly distributions that are largely exempt from regular federal income tax. It trades on the New York Stock Exchange, holds roughly $900 million in assets, and posted a market distribution rate of about 4.49% as of June 1, 2026.¹ The fund launched on March 19, 1992 and is managed by Nuveen, a subsidiary of TIAA.

What the Fund Holds

NXP’s objective is current income exempt from regular federal income tax, with capital preservation as a secondary goal. At least 80% of managed assets sit in investment-grade municipal securities, meaning bonds rated BBB-/Baa3 or higher at purchase. Where a bond isn’t rated, Nuveen’s managers can buy it if they judge it to be of comparable quality.¹

The other 20% can hold bonds rated below investment grade, and up to 10% of managed assets may sit in bonds rated below B-/B3. That allowance lets the managers reach for higher yields, but it also brings more credit risk than a purely investment-grade portfolio would carry.¹

The bonds themselves are issued by states, cities, counties, school districts, and special-purpose authorities. The top holdings include paper from New Jersey, Illinois, Texas, Arizona, Minnesota, California, Massachusetts, and New York.² Sectors span transportation, healthcare, education, and public utilities, so trouble in a single state or sector doesn’t drag the whole portfolio with it.

How the Closed-End Structure Affects Price

NXP is a closed-end fund, not a mutual fund or an ETF. It issued a fixed number of shares at inception, and those shares now trade on the NYSE like a stock.² Because the share count is fixed, the fund never has to sell bonds to meet redemptions the way a mutual fund does. Managers can hold to maturity and wait out stressed markets.

The trade-off: the exchange price doesn’t always match the value of the underlying bonds. Net Asset Value (NAV) is the total value of the bonds minus liabilities, divided by shares outstanding. When the market price sits below NAV, shares trade at a discount; above NAV, at a premium. NXP’s five-year average discount was about -0.48% as of early June 2026, with a same-day discount of -0.21%.² Those spreads are narrow by closed-end fund standards. Buying at a discount means paying less than a dollar for every dollar of bond value, which lifts your effective yield a touch. Premiums do the opposite, and paying more than a few percent above NAV is worth pausing over: your capital can erode even if the bonds themselves hold their value.

Leverage and Interest Rate Risk

Many Nuveen closed-end funds borrow heavily to amplify returns. NXP doesn’t. It uses tender option bonds capable of producing up to 10% effective leverage, but as of April 30, 2026, effective leverage sat at 3.01%, with an annualized leverage cost of 3.67%.¹ That’s modest next to peers running 30% or 40% leverage. Smaller amplification in both directions.

Interest rate movement is the bigger day-to-day driver. Bond prices move opposite to rates. Duration measures how much: a fund with effective duration of 8.5 years would lose roughly 8.5% of NAV if rates rose one percentage point, and gain about the same if rates fell that much. NXP’s portfolio sits in the longer-duration range, so it reacts more sharply to rate moves than a short-term bond fund would.³ If you plan to collect distributions for years, short-term price swings matter less. If you might need to sell during a rising-rate stretch, the exit price could be well below what you paid.

Distributions and Taxes

NXP pays every month. As of June 1, 2026, the market distribution rate was about 4.49% and the NAV distribution rate 4.48%.¹ Most of each distribution is municipal bond interest, which Section 103 of the Internal Revenue Code excludes from gross income for regular federal income tax purposes.⁴ For someone in the 32% or 35% federal bracket, a 4.49% tax-free yield translates to a considerably higher taxable-equivalent yield.

Alternative Minimum Tax

Not every dollar escapes the AMT. As of March 31, 2026, approximately 14.53% of the fund’s income was treated as a tax preference item subject to AMT.¹ Most shareholders won’t owe AMT. If you do, some of what would otherwise be tax-free gets pulled back into your taxable calculation.

State Taxes

Federal exemption doesn’t carry over automatically to state taxes. Most states with an income tax will tax interest from out-of-state municipal bonds. NXP holds bonds issued nationwide, so shareholders in states like New York or California will likely owe state tax on the portion tied to out-of-state issuers. Investors in states with no income tax, such as Florida and Texas, avoid the question.

Capital Gains When You Sell

The exemption applies to interest, not to gains on the shares themselves. If you sell NXP for more than you paid, the profit is a taxable capital gain; sell for less and you have a loss you can use against other gains. Shares held more than a year qualify for long-term rates; a year or less means ordinary income rates. If losses exceed gains in a year, you can deduct up to $3,000 of the excess against other income ($1,500 if married filing separately) and carry the rest forward.⁵

Reporting

Each January, shareholders receive Form 1099-DIV showing how much of the prior year’s distributions was tax-exempt interest, how much was subject to AMT, and whether any portion was a taxable capital gain or return of capital.⁶

Expenses

The total annual expense ratio is 0.23%: a 0.18% management fee plus 0.05% in other expenses.⁷ That’s low for a closed-end municipal bond fund. Expenses come out of fund assets before distributions are calculated, so you never write a separate check, but they reduce your effective yield. The 3.67% annualized leverage cost is a separate drag; with leverage at roughly 3% of assets, the dollar impact is small.

How to Buy Shares

You buy and sell NXP through a brokerage account the same way you’d trade a stock. Enter the ticker on your broker’s platform to see real-time pricing, the current discount or premium to NAV, and recent trading volume. A market order fills at whatever price is available; a limit order caps the price you’ll pay. For a fund that can trade thinly, a limit order is usually the safer choice, and checking the current NAV before you enter the order tells you whether you’re buying at a discount or a premium.

There’s no minimum beyond the price of one share. You pay your broker’s standard commission, if any. Shares can sit in taxable accounts, IRAs, or other retirement accounts, though holding tax-exempt municipal income inside a tax-sheltered retirement account generally wastes the tax advantage that makes the fund attractive to begin with.

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Nuveen. Nuveen Select Tax-Free Income Portfolio
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CEF Connect. Nuveen Select Tax Free Inc
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Municipal Securities Rulemaking Board. Evaluating a Municipal Bond’s Interest Rate Risk
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Office of the Law Revision Counsel. 26 U.S. Code 103 – Interest on State and Local Bonds
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Internal Revenue Service. Topic no. 409, Capital Gains and Losses
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Internal Revenue Service. About Form 1099-DIV, Dividends and Distributions
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Nuveen. Nuveen Select Tax-Free Income Portfolio (NXP)