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Robots Bought Munis Amid Record Sell-Off’s ‘Baptism of Fire’

  • Muni quants stepped in to buy when Wall Street pulled back
  • Secondary market offerings soared as investors fled funds

Photographer: Luke Sharrett/Bloomberg

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In March, Jason Diefenthaler, director of tax-exempt portfolio management at Wasmer Schroeder, noticed something.

On a typical morning, the Naples, Florida-based money manager would get 25 bids each for the 50 to 300 municipal bonds he put up for sale to dealers. Now, he was getting two to five and they weren’t coming from Wall Street. Instead, independent firms that use algorithms to respond to thousands of auctions, were providing the best bids and buying bonds.