What is a common disadvantage of municipal bonds?

Municipal bonds are often considered to have illiquidity as a common disadvantage. This means that they can be more difficult to buy and sell compared to other types of securities, which may make them less appealing to certain investors. Additionally, municipal bonds typically offer lower yields than corporate bonds. While they provide tax advantages, such as being exempt from federal taxes and often from state taxes, this benefit usually comes at the cost of lower overall returns. Investors looking for higher yields may therefore find municipal bonds less attractive compared to corporate bonds. The combination of illiquidity and lower yields can limit their appeal to a broader range of investors who may prefer the liquidity and potentially higher returns associated with corporate bonds.