Municipal Short-Term Bond Fund

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Municipal Short-Term Bond Fund

A mutual fund that invests predominantly or exclusively in municipal bonds with maturities of less than a few years. The idea behind a short-term bond fund is to provide a return at little risk (compared to other investments) that is nonetheless better than the risk-free rate of return. Because it invests in municipal bonds, dividends from the fund are tax-free at the federal level (though they may be subject to state taxes unless all bonds in the fund are issued in the state where the holder resides).
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