QVM Group

Muni Bonds: Constructive in Current Portfolio Asset Allocation

I.U.
There is nothing wrong with buying individual bonds, if you have sufficient capital to buy at size for low spreads, and diversely to minimize issue selection risk, and if you have the time and inclination.

It's virtually impossible to beat the risk reduction of a large bond fund on an individual basis. The Vanguard intermediate muni fund has about $20 billion in it and has over 1600 issues and charges only 8 basis points fee.

But, if you want to buy your own bonds that is a perfectly appropriate and feasible approach.

There is nothing in the article that would suggest you should not buy individual bonds. It is an article about funds, not an article about funds versus individual securities.

I would imagine that for the vast majority of readers, funds are the preferred route, but we have clients who own individual bonds too.

Muni Bonds: Constructive in Current Portfolio Asset Allocation

I will try to devote some time to corporates.

Thanks to all for the kind words.

I prefer funds over individual bonds to diversify issue selection risk. I prefer national funds over state specific funds is to diversify state specific risk. I would gravitate to concentration on general obligation bonds versus revenue bonds to minimize credit risk, and to concentrate what credit risk is assumed to sovereign risk backed by taxing power.

I agree that CA is a more problematic state than many others.