Municipal Bond Fund

Municipal Bond Fund - a municipal bond fund is a mutual fund who strictly invests in municipal bonds. also called muni funds.. Municipal bond funds are exempt from paying federal taxes, and in some case even exempt from state taxes... Most investors that invest in mumi funds are in the higher tax bracket, so muni funds are a good choice, to avoid being taxed on the dividends.  Mona funds are debt securities that are held by state, county or local governments, usually to finance capital expenses, such as libraries airports, etc.