Municipal closed end funds are also known as “Muni”, and are a type of bonds or funds that is issued by the United States government. The organization that issues such municipal funds includes the development agencies of counties, districts, cities etc. In short we can say that all the government organizations that work at or below the provincial or state level issues such municipal closed end funds.
Most of the time the funding that is generated from these municipal closed end funds are free from state interest and from other kind of taxes as well, but this varies from one municipal closed end fund to another as the funding that is generated from such kind of bonds are taxable as well! However, the interest and tax of the local or state government largely depends upon where the funding from municipal bond is going to be used, whether this funding would be used for the benefits and welfare of the state people or whether that funding will be used by the private investors for their own interest. If the funding from municipal closed end funds is used for private interests then the state tax or interest is applicable.
Sometimes it becomes really very difficult to understand that which kind of funding from closed end funds should be taxed and which should be not, however the rate of interest or tax of each bond is fixed. A regular user of such municipal closed end funds knows that which kind of bond or funding is free from the state tax.
The buyer of such municipal bonds has his own will that where would he like to spend the funds from these bonds, whether he would like to spend on recreational purposes or for his own interest. However there is a different law that is connected with each bond when it comes to tax or interest rate. A huge amount of risk is involved with such bonds; this risk is only in association with the issuing authority of such municipal closed end funds that whether the issuing authority would be able to pay the funding in full amount and on time as well or not! However it can be said as safe investment, as there is an agreement signed between both the holder and the issuer of such bond, which makes the issuing authority liable to pay full funds to the bond holder. The security of each municipal closed end fund varies from one bond to another in number of ways, as every bond has its own terms and conditions.