Guide · US Municipal Bond
Best municipal bond ETFs
A municipal bond fund holds debt issued by US states, cities, and local government agencies. Interest from most munis is exempt from federal income tax; in-state munis are typically also exempt from state income tax for residents. For high-bracket taxable-account holders, the after-tax yield on a muni fund can match or exceed a comparable-duration corporate bond fund at noticeably less credit risk.
How the scoring ranks these funds
Only two catalog funds in this category, both near-identical in exposure and at fees the rest of the bond category would envy. VTEB and MUB carry the highest tax-efficiency scores in the catalog — federally tax-exempt distributions waive the distribution-rate penalty that pulls every other bond category's tax-efficiency down. This shows up clearly in the composite: both funds score in the high 90s.
See the methodology for the full formula behind each sub-score.
Top picks
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97
composite / 100
Vanguard's national muni fund. 3 bps; the lowest-cost broad muni ETF on the market. Tracks the S&P National AMT-Free Muni Bond Index — investment-grade, no AMT exposure, full national coverage. The default choice for taxable accounts in high tax brackets.
- Expense
- 0.030%
- AUM
- $45.58B
- Issuer
- Vanguard
- Detail
- VTEB page →
-
96
composite / 100
iShares' national muni fund. 5 bps; near-identical exposure to VTEB and a longer track record. Functions as a tax-loss-harvesting partner to VTEB — different index family, near-identical risk and yield profile.
- Expense
- 0.050%
- AUM
- $43.71B
- Issuer
- iShares
- Detail
- MUB page →
Also in the category
Other funds scoring in this category. Same data, no editorial commentary yet.
When munis are the right tool
The break-even decision is purely arithmetic: a muni fund yielding M is equivalent (pre-tax) to a taxable bond fund yielding M / (1 - your marginal tax rate). At a 24% federal bracket, a 3.5% muni yield is equivalent to a 4.6% taxable yield. Higher brackets and state-tax-aware investors get more benefit. At the 12% bracket or in a tax-advantaged account, munis lose their edge and a Treasury or aggregate fund delivers higher after-tax yield.
In-state vs national
A national muni fund like VTEB is exempt from federal tax only; an investor in a high-tax state can buy a single-state muni fund (e.g. iShares' MUNI, CMF, MJI) for additional state-tax exemption on the in-state portion. Single-state funds aren't in the catalog yet; for most investors the simplicity of a national fund outweighs the marginal state-tax savings unless income is concentrated in one of the highest-tax states.
Guide. Picks come from the live PlainIndex composite for this category; editorial commentary on each pick is hand-written. Re-pulled with every catalog refresh.
PlainIndex publishes data and editorial commentary — nothing here is personalized investment advice. Read the methodology for how the scores referenced here are computed.