The municipal bond market is a fragmented, inefficient one, which is why it may make sense to buy bonds from a bond dealer, as opposed to a stockbroker. The knowledge and expertise required to guide investors through the market is specific, and a qualified bond dealer has the capability to recommend a suitable bond at a fair market value.
A qualified bond dealer or broker/dealer understands the overall and regional market, as well as the challenges investors face. Before making any recommendation, a dealer takes into consideration the factors that make a bond work for a specific investor, such as credit rating, call features, maturity schedule, liquidity, coupon and tax-free income and other issues.
For investors, a qualified bond dealer can help create a portfolio that as
part of the total asset allocation process can help
diversify credit risk while addressing the impact
of a volatile market. A laddered portfolio manages
interest rate and reinvestment risk.
