There are many advantages of corporate bonds relative to other investments. Individual corporate bonds offer investors strong returns but with less downside than stocks. They offer greater transparency than bond
funds and ETFs, as you know precisely the security in which you are investing and can invest according to your risk tolerance and investment returns
objectives. If you own an individual corporate bond, you pay a fee when you buy it and if you sell the bond prior to maturity. This fee
structure can offer considerable savings to the recurring fees investors pay when investing in bond funds and bond ETFs.
We believe there is far greater financial reporting transparency for corporate bonds compared to municipal bonds, as corporate bond issuers are required to report their financial performance quarterly and have other reporting requirements when material events occur at the company. Municipal bond issuers have far less stringent financial reporting requirements. Taken together, we believe investors can better assess the value of a corporate bond than a municipal bond since there is a far greater level of financial information available to corporate bond investors. This presents opportunities for corporate bond investors to achieve strong capital appreciation, and, as a result, after-tax returns that can exceed those of municipal bonds.
Please click here for a detailed comparison of the advantages of individual corporate bonds vs. municipal bonds.