I know BH is heavily oriented towards funds (ETF and/or mutual funds).
I've been an individual muni-buyer for a fairly long time, and have done fairly well doing so.
Here are, IMO, just some of the advantages of individual munis, for me at least (and some, but not all, others), vs. muni funds:
1) Can tailor for state specific, in a state where there is not a cheap fund alternative.
I'm in Missouri. Buying state-specific saves me 15-25 bp or so in state taxes. Vanguard does not have a Missouri-specific fund, and the fund providers that *do* have a Missouri fund charge expense ratios that dwarf the state taxes. There are, of course, a lot of other states like Missouri (have a state income tax, and no good state-specific fund).
2) No expense ratio
Muni funds tend to have a higher ER than, say TSM (equity funds). Save about 9 bp there.
Add them together and it's close to 40 bp of savings/tail-wind
3) Inefficient market, with room for smart analytics.
There are something like 4-6K US equities (excluding maybe some junkier OTC stuff). There are *far* more munis, including a lot of small issues, some of which are unrated. Do you think the fund manager at Vanguard is going to spend a lot of time studying a for-sale block of 75K face value of some obscure/small Missouri muni? Doubtful. That leaves room for the individual investor to develop some expertise and pick and choose. Local knowledge (and research) of the main & smaller institutions in your state can help.
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Anyways, I won't go much deeper for now unless there are some others here who do this and want to discuss it (perhaps from other states so you don't vulture-pick from my Missouris!)
I've been an individual muni-buyer for a fairly long time, and have done fairly well doing so.
Here are, IMO, just some of the advantages of individual munis, for me at least (and some, but not all, others), vs. muni funds:
1) Can tailor for state specific, in a state where there is not a cheap fund alternative.
I'm in Missouri. Buying state-specific saves me 15-25 bp or so in state taxes. Vanguard does not have a Missouri-specific fund, and the fund providers that *do* have a Missouri fund charge expense ratios that dwarf the state taxes. There are, of course, a lot of other states like Missouri (have a state income tax, and no good state-specific fund).
2) No expense ratio
Muni funds tend to have a higher ER than, say TSM (equity funds). Save about 9 bp there.
Add them together and it's close to 40 bp of savings/tail-wind
3) Inefficient market, with room for smart analytics.
There are something like 4-6K US equities (excluding maybe some junkier OTC stuff). There are *far* more munis, including a lot of small issues, some of which are unrated. Do you think the fund manager at Vanguard is going to spend a lot of time studying a for-sale block of 75K face value of some obscure/small Missouri muni? Doubtful. That leaves room for the individual investor to develop some expertise and pick and choose. Local knowledge (and research) of the main & smaller institutions in your state can help.
===
Anyways, I won't go much deeper for now unless there are some others here who do this and want to discuss it (perhaps from other states so you don't vulture-pick from my Missouris!)
Statistics: Posted by psteinx — Mon Jan 27, 2025 4:52 pm — Replies 22 — Views 565