The Diversity of Municipal Bonds and What You Need to Know About Risks

by Robert Doty

The Diversity Of Municipal Bonds And What You Need To Know
About Risks Splash image

The Securities and Exchange Commission (SEC) estimates that there are 50,000 municipal securities issuers, and the Municipal Securities Rulemaking Board (MSRB) estimates that there are 80,000. Municipal issuers include states, agencies, cities, counties, school districts, fire districts and a host of special districts, agencies and authorities. It can be difficult to make sense of so much diversity.

In reality, the municipal market consists of two vastly different markets. One market is for traditional municipal securities that are very sound and secure, with extremely low default risks. The other is a market of readily identifiable riskier securities. Since the riskiest municipal securities can be identified readily in advance, there is no need for investors to be alarmed.

To know what you are buying requires reading official statements (prospectuses) and continuing disclosure filings made by municipal issuers and private borrowers. Those documents are available at the Electronic Municipal Market Access (EMMA) website maintained by the MSRB at That website is a valuable resource.

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Robert Doty is president of AGFS, a private consulting company in Sacramento, California. He has authored half a dozen books, including the “Bloomberg Visual Guide to Municipal Bonds” (Bloomberg Press, 2012), and over 80 articles on finance. His website is


Charles from Washington posted about 1 year ago:

If you really want to know about bonds, especially munis, buy the book: Bonds, The Unbeaten Path to Secure Investment Growth by Hildy and Stan Richelson. Published in 2011; it's the bible.

Leroy from Colorado posted about 1 year ago:

wow stop the world an let me off.

Gary from Colorado posted about 1 year ago:

It would be helpful to know if there are any ETFs that invest primarily or exclusively in Municipal General Obligation Bonds.
Suggestions welcomed.

Don from Pennsylvania posted about 1 year ago:

I have both of their books. They are great for bond info.

Richard O'reilly from California posted about 1 year ago:

It's nice to know there exists this kind of useful info. about Munis.
Is there a source that lists the risk factor of any particular bond?

C Kennison from Florida posted about 1 year ago:

Which states prohibit bankruptcy of their municipalities?

Darryl from Massachusetts posted about 1 year ago:

I would like to buy some individual municipal bonds. Is there an active market for them where I can buy them? If so where? I do not want a mutual fund through a stock brocker.

Sagar from Connecticut posted about 1 year ago:

where are answers to the questions? Do we have ETF's for Bonds?

Charles Rotblut from Illinois posted about 1 year ago:


Our ETF guide has a complete listing of exchange-traded funds, including muni bond ETFs. You will have to look at each fund to determine exactly the type of muni bonds the portfolios hold, however.


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