Municipal Bonds Increasingly Held by Funds Rather Than Retail Investors

Posted on July 12th, 2022 at 8:47 AM
Municipal Bonds Increasingly Held by Funds Rather Than Retail Investors

From the Desk of Jim Eccleston:

The percentage of outstanding municipal bonds owned by U.S. retail investors dipped to 40% in the first three months of the year in comparison to 46% in 2020, according to a Municipal Securities Rulemaking Board report. 

The board analyzed Federal Reserve data before determining that the market is shifting from direct ownership of bonds to investment via funds. The amount held outright by retail investors through individual brokerage accounts is likely closer to 20% since the Federal Reserve includes some Wall Street-managed accounts in its household category. According to Federal Reserve data, mutual funds and exchange-traded funds controlled 24% of municipal bonds in the first quarter of 2022, which is an increase from 20% in 2020. In particular, for example, only 3% of treasury bonds and 1% of corporate bonds are held by retail investors, according to the Municipal Securities Rulemaking Board.

The increasing control that asset managers have over the municipal bond market has contributed to the market’s volatility, according to analysts. Investors in exchange-traded funds and mutual funds are permitted to sell easily while buy-and-hold investors are more likely to hold the bonds until maturity. 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

Tags: eccleston, eccleston law, bonds, municipal bonds

Return to Archive

TESTIMONIALS

Previous
Next

 


It was really fun seeing you fight for us. You have an amazing way of thinking out of the box.


 

Beth M.

LATEST NEWS AND ARTICLES

September 16, 2025
Former Morgan Stanley Advisors Win Partial Court Victory in Client Solicitation Dispute

Two former Morgan Stanley advisors in Hackensack, New Jersey have defeated Morgan Stanley’s initial effort to block them from soliciting clients, according to an August 15 order from New Jersey Superior Court.

September 15, 2025
California Young-Gun Investor Charged in Alleged $6 Million Ponzi Scheme

Federal prosecutors have accused Mihir Deepak Sukthankar, a California resident once celebrated as a teenage trading “prodigy,” of orchestrating a multi-million-dollar Ponzi scheme.

September 12, 2025
LPL Broker Fined and Suspended for Recommending Risky Investments to Elderly Client

An LPL Financial broker in Elizabethtown, Kentucky, has agreed to sanctions after FINRA found he violated Regulation Best Interest (Reg BI) when recommending unsuitable investments to an elderly customer.