Earl E Retyre
Full time employment: Posting here.
- Joined
- Jan 1, 2010
- Messages
- 541
Do any of the people on FIRE who invest heavily in munibonds pay a portfolio manager fee to manage your munibond portfolio for you? Is it worth paying a .5% fee?
What is there to manage? Is this buying and selling or buying and holding? It is difficult to buy muni bonds in small quantities without paying very high markups. Much better to pay the 0.5% to muni mutual fund managers IMHO and let them do the work.Do any of the people on FIRE who invest heavily in munibonds pay a portfolio manager fee to manage your munibond portfolio for you? Is it worth paying a .5% fee?
This is buying and mostly holding. Supposedly the manager would (a) help select the bonds and (b) continually/actively track the quality of the bonds so if the municipality investment degraded then they would sell for you if they thought it made sense. If going with a muni fund manager, as you point out, you are still paying the .5% fee but then you do not have the guaranteed fixed income and principle return if held to maturity. That is my understanding anyway.
You may want to doublecheck that 0.5% figure. I was invited to a Schwab "educational" seminar a few yrs ago.
If you wish to hold to maturity, you can do so with a fund. There are scads of muni closed end funds with target liquidation dates, which means they are essentially holding bonds to maturity. Find one you like offered by a brand name muni manager (I think highly of Nuveen) and skip the individual manager. Either taht or just buy the bonds yourself and skip the managers.