Municipal Bond Fund

A municipal bond fund is an investment fund that pools money from many investors to buy a diversified portfolio of municipal bonds—debt securities issued by state and local governments to finance public projects such as schools, highways, and hospitals. These funds offer investors tax-advantaged income, as the interest earned is usually exempt from federal taxes and may also be exempt from state and local taxes if the bonds are from the investor's state. Municipal bond funds provide diversification, steady income, and are typically chosen by investors seeking stable, tax-efficient fixed income options in their portfolios.