Junk Muni-Bond Fund Law and Legal Definition
Junk Muni-Bond Fund refers to a mutual fund or unit trust that invests in relatively low-grade tax-exempt bonds or municipal bonds with junk rates in order to earn a higher return. Funds are invested in bonds with higher risks that banks cannot invest in them. Investments in these types of funds are done mainly by mutual fund or other investment companies. The advantages of junk muni-bond fund are:
1. that the extra risk results in higher returns; and
2. that municipal bonds are exempt from federal taxes.
