What is a municipal bond ETF?

A municipal bond ETF invests in bonds issued by states, cities, or other municipal entities. In the U.S., muni bond interest is often exempt from federal income tax, and sometimes from state tax if you buy in-state bonds.

Munis still carry credit risk and interest-rate risk, and muni ETFs can lose value when rates rise. Liquidity can also be a factor in stressed markets.

If you're choosing a muni ETF, consider whether it's national or state-specific, the average credit quality, duration, and your own tax situation. The benefit is largely about after-tax yield, not just the headline distribution.