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Definition of 'Municipal Bond Fund'
A mutual fund that invests in municipal bonds, or "munis." Municipal bonds are debt securities issued by a state, municipality, county, or special purpose district (public schools, airports, etc.) to finance capital expenditures. They are exempt from federal tax, and are generally exempt from state taxes for residents of the state in which they are issued.
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Investopedia explains 'Municipal Bond Fund'
Municipal bonds and bond funds are generally bought for their favorable tax implications and are a popular fixed-income investment for people in a high income tax bracket. Like all bonds, the municipal variety is subject to an investor's consideration of yield, credit quality and duration.
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These funds can provide stable returns for those who depend on their investment income.
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We go over some of the key factors for determining a fund's risk-return profile.
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Find out how to determine whether the tax exemption offered by "munis" benefits you.
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Investing in bonds - What are they, and do they belong in your portfolio?
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Learn about the basics - and the pitfalls - of investing in mutual funds.
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