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Introduction to Municipal Bond Funds

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Mutual funds that invest in municipal bonds could save you money in taxes. Learn about the popular tax-deferral feature.

What you will learn

  • What Are Municipal Bond Funds?
  • Composition of Municipal Bond Funds
  • Municipal Bond Fund Performance

What do you know?

Introduction to Municipal Bond Funds

Municipal bond mutual funds are popular because the interest they earn is almost never subject to federal taxes. In many cases, earnings from these funds are not subject to state taxes either. Municipal bond mutual funds invest in debt securities of state and local governments that investors perceive to be less risky than corporate bonds. Because they pay regular dividends, they are favored by investors seeking current income.