Municipal Bond Forum
Muni bond funds vs. individual bonds
Q
What are the pros and cons of muni investment using mutual funds vs. individual issues?
A
James A. Klotz responds:
We invariably prefer individual bonds over municipal bond funds if an investor has the wherewithal to provide adequate diversification.
A bond fund has no maturity date, which means there is no promise to return principal as there is with individual bonds.
Individual bonds have a fixed income rate, which is unaffected by declining interest rates.
Open end muni funds can reduce dividend payments in a declining interest rate environment.
Additionally, individual bonds have no ongoing fees, as do most bond funds.
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.
