Municipal bonds are a rare asset class with an outsized retail influence. According to the Investment Company Institute, individual investors hold about 35% of muni bonds directly and another 36% indirectly in mutual funds, closed-end funds and ETFs.

Unlike insurance companies, pension managers and others with an unlimited investment horizon, retail investors are susceptible to headline risk — the possibility that a news story will hurt a security’s price. (Remember the anxiety after Meredith Whitney predicted a wave of muni defaults back in 2010?)

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