ETF Bond Type: Municipal Bond ETFs, or exchange-traded funds, are a type of investment vehicle that allows investors to buy and sell shares of a fund on an exchange. ETFs usually track a particular index, such as the S&P 500, or a sector of the market. Municipal bond ETFs are ETFs that invest in municipal bonds. Municipal bonds are debt securities issued by state and local governments to finance public projects, such as roads, schools, and bridges. Municipal bonds are exempt from federal taxes, and they may also be exempt from state and local taxes, depending on the laws in your jurisdiction. Municipal bond ETFs provide a way for investors to invest in the municipal bond market without having to purchase individual bonds. ETFs offer many benefits, including liquidity, diversification, and lower costs than traditional mutual funds.