Municipal Bond Forum
What to look for – and avoid – in a muni bond broker
Q
We have a “prudent-investor” broker with another firm who put over $1 million into Puerto Rico bonds. We almost “killed” him when we found out what he did. Now we have to watch him very carefully to make small investments and gain a decent return. Any advice? We have about $2 million still invested. We understand a lot depends on the actions of the current government in Puerto Rico, which is very slow to react.
A
James A. Klotz responds:
Interesting: You evolved from “almost killing” your broker to “watching him very carefully” – but not to finding a new one.
As our clients and friends know, we consider it imprudent for investors to leave investment decisions regarding their municipal bond investments solely to any broker, even one of our own bond specialists.
Tax-free bonds are easy. Our clients are involved in the selection process, and unless, over time, there is a fundamental change in the security, they employ a buy-and-hold strategy.
Tax-free bonds do not need to be managed, and paying management fees that can dramatically reduce returns is also unnecessary.
Unfortunately, we cannot offer you any advice without being more familiar with your specific situation and longer-term investment objectives.
Keep in mind, Puerto Rico has 18 different issuing entities and no two are alike.
If you would to discuss this further, we would be pleased to offer assistance.
Start here.
Do you have specific criteria for bonds you’re looking for? Let us know and we’ll e-mail you bonds that fit your needs. There is no charge for this service.
The responses provided in this forum are meant to address specific questions posed by investors about their municipal bonds and to provide market insight for our general audience. Please note, your investments, objectives, results and experience may differ significantly. Our answers and any potential strategies discussed should not be construed as a solicitation to buy nor sell any security or investment product. All investing entails risk.
