If you are considering starting an investment business, a good place to start is with municipal bond funds. Municipal bonds are a popular investment item, with daily trading in the tens of billions. Much of that investment is through municipal bond funds investing.

Perhaps the chief benefit of municipal bonds (also called munis) is that income earned from the investment is exempt from federal income taxes. Investors also view them as a way to help pay for needed infrastructure improvements in the nation's cities. Muni bonds are issued by thousands of municipalities and garner a range of investment ratings. Muni bond funds select from among these offerings according to the fund's investment philosophy and strategy. As the first step in starting your muni bond funds brokerage, gather information about muni bond funds investing to:

1. Find out how to create a municipal bond fund portfolio for your clients.

2. Look for the municipal bond funds that best fit your investment philosophy and strategy as a muni bond funds broker.

3. Start your muni bond funds brokerage with a selection of funds you feel comfortable recommending.

Action Steps
The best contacts and resources to help you get it done

Learn about the intricacies of municipal bond funds

Because your brokerage will be responsible for helping customers invest in municipal bond funds, it's important to know about the trends in the funds. Many muni bond funds have online libraries and glossaries of vital information. Also speak with a muni bond funds trader about what to look for in your research.

I recommend: Van Eck Securities, a leader in municipal bond funds investing, has online information about the various funds that it represents. EFT Connect also represents several muni bond funds. Its website provides abundant muni bond funds help.

Study several municipal bond funds

Investors who buy muni bond funds are rewarded with lower trading costs, investment diversity and liquidity. In addition they can rely on a professional fund manager to make the decisions to get higher yields. Review the track records of the managers of the funds you are interested in representing

I recommend: In addition to managing a number of muni bond funds, Dreyfus offers a wide range of market advice. At FCM you can order a free municipal bond fund guide and lots of other muni investment information.

Select the funds to stock your muni bond funds brokerage

There are dozens of municipal bond funds. Study the literature of each and confer with its fund manager to help you choose the muni bond funds for your business.

I recommend: State Street represents four muni bond funds and welcomes inquires about municipal bond funds investments by trading professionals. T. Rowe Price has a number of well-performing muni bond funds, including Summit Municipal Income.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Almost all investment firms now have a presence on the Internet. Consider links to municipal bond markets with daily (or more often) updating. You will need to decide whether your muni bond funds firm will sell online. If so, your website will need to accommodate the transactions.