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Contact:     Leah Szarek, Chief External Relations Officer


Funds Chip Away at Direct Ownership

Washington, D.C. – In its latest research report, the Municipal Securities Rulemaking Board (MSRB) examines trends in municipal securities ownership since 2004, revealing a continuous decline in individual investor direct ownership of municipal securities while ownership through funds has steadily risen. Looking at Federal Reserve data from 2004 through the first quarter of 2022, the MSRB found that ownership among banks, insurance companies, money market funds and foreign investors has also shifted, with various factors driving these trends, including changes in U.S. tax law, the prevailing interest rate environment, and the availability of taxable securities, among other changes.

While gaining approximately 47% since 2004, overall growth of the municipal securities market has slowed substantially in recent years. Ownership of municipal securities has changed significantly during that time period, with ownership through funds—primarily mutual funds and exchange-traded funds (ETFs)—taking a significant share from direct ownership as individual investor product preferences have shifted.

“What is most notable about this shift in ownership from individual investors to funds is the growth of ETFs in the municipal securities space,” said John Bagley, Chief Market Structure Officer. “ETF holdings of muni bonds have doubled in the last two years and grown more than 75-fold since the Federal Reserve began tracking in 2008, with 33 straight quarters of market share gains since 2013. While still representing a relatively small share of municipal bond holdings at 2%, year-to-date, ETFs have experienced inflows even as mutual funds have experienced outflows, cementing ETFs’ position as a holding class to watch.”

Investor direct ownership of municipal securities currently still claims the largest share of the market at 40%, but it has fallen steadily from 54% in 2004 and accelerated its decline since 2020, when it stood at 46%. Meanwhile, fund ownership, including holdings by mutual funds, ETFs and closed-end funds, have increased by 145% since 2004, from $438 billion, or 16% of the total market, at the beginning of 2004 to $1.1 trillion, or 26% of the market, at the end of Q1 of 2022.

Other key developments since 2004 include:

  • A substantial decline in money market fund ownership of municipal securities, from an all-time high of 15.6% of the market in 2008 to just 2.5% of the market in 2022;
  • An overall increase in bank ownership since 2004, reaching a high of 13.8% of the market in 2017 before declining following tax law changes that reduced the corporate tax rate from 35% to 21%;
  • A significant shift in insurance company ownership, with ownership among life insurance companies increasing while ownership among property and casualty companies has declined; and
  • A steady increase in foreign holdings of municipal securities, closely correlated with a rise in the availability of taxable securities.

Read the report for more detail.
Access additional research and market data publications from the MSRB.


The Municipal Securities Rulemaking Board (MSRB) protects and strengthens the municipal bond market, enabling access to capital, economic growth, and societal progress in tens of thousands of communities across the country. The MSRB fulfills this mission by creating trust in our market through informed regulation of dealers and municipal advisors that protects investors, issuers and the public interest; building technology systems that power our market and provide transparency for issuers, institutions, and the investing public; and serving as the steward of market data that empowers better decisions and fuels innovation for the future. The MSRB is a self-regulatory organization governed by a board of directors that has a majority of public members, in addition to representatives of regulated entities. The MSRB is overseen by the Securities and Exchange Commission and Congress.