Executive summary. For the vast majority of investors in municipal bonds, mutual funds have a number of advantages over individual bond portfolios. Individual bonds do provide certain benefits compared with bond mutual funds, and these advantages revolve primarily around control issues. The price for the advantages can be thought of as a “control premium” that is paid through generally higher (or additional) transaction costs, lower liquidity, more limited return opportunities, and higher risks. Some investors may be willing to pay that premium and forgo alternative strategies to receive the control benefits. However, an investor who chooses to create an individual bond portfolio must assign a very high value to.
