Municipal bonds, or munis, are debt securities issued by states, counties, cities, agencies and local districts to finance capital and infrastructure projects, such as roads and bridges, schools, administrative buildings and other public projects. Interest on most municipal bonds is exempt from regular federal income tax in addition to the state and local income taxes in the state or locality where they are issued.1 Some municipal bonds are also exempt from income tax in other states.
Muni bonds historically have had very low default rates compared to other types of bonds because they are issued by governments or their legal authorities.
Muni bonds historically have had very low default rates compared to other types of bonds because they are issued by governments or their legal authorities. This has made them a compelling choice for investors seeking a reliable source of income that is also usually free from regular federal income tax. On an after-tax basis, municipal bonds typically yield more than taxable alternatives.
Franklin Templeton offers national and state-specific munis. Each possess their own characteristics, level of risk and tax treatments.
Franklin Templeton offers national and state-specific munis. Each possess their own characteristics, level of risk and tax treatments.
General obligation (GO) bonds:
“GOs” are backed by the “full faith and credit” of the issuer, such as a state or city, meaning it can levy taxes as much as necessary in order to pay interest and principal on the bonds. In most cases, interest on GO bonds is payable first before any other obligation.
Revenue bonds:
Interest on these bonds is backed by the revenues from a specific public project, such as a toll road, electric power plant, or water and sewer facility. These bonds usually pay higher interest rates than GO bonds.
Franklin Templeton is one of the largest municipal managers in the nation. Over 35 tax-free strategies cover all geographies and the full credit quality spectrum and are available through mutual funds, ETFs and SMAs.
Please click on drop down to see strategies available for each state.
Franklin Alabama Tax-Free Income Fund
Alabama state-preference mandate available
An active, research-driven approach is critical given the vast size, nuance and complexity of the municipal market. Our deep team of research analysts conducts comprehensive analysis of every opportunity across all sectors in the municipal bond universe, covering the quality spectrum in both primary and secondary markets.
Our team places a premium on risk management which is incorporated fully within our deep credit research process, portfolio construction process and with an independent risk management team, enabling us to better understand, quantify and optimize where we allocate risk across our portfolios.
With more than 50 years of municipal bond investing experience and a seasoned team of over 25 investment professionals, we have one of the largest and most tenured teams in the industry.
We seek to identify and capture attractive relative value opportunities by carefully analyzing and managing yield curve positioning, credit spreads and coupon and call structures to help deliver tax-efficient portfolios, while aiming to provide attractive risk-adjusted returns.
July 6, 2026
Municipal bonds finished the first half of 2026 with strong momentum, outperforming many other areas of the bond market despite record levels of new issuance. In this month's update, the Franklin Templeton Fixed Income team looks at what's driving demand, why municipal bond fundamentals remain resilient, and what investors should watch as we head into the second half of the year.
June 4, 2026
As the population ages, municipal credit is evolving. Jennifer Johnston, Director of Municipal Bond Research at Franklin Templeton Fixed Income, breaks down what the “Silver Tsunami” means for key healthcare sectors and investors in the final part of this two-part muni credit research series.
April 27, 2026
Birth rates are falling and municipal bond credits are diverging according to Jennifer Johnston, Director of Municipal (Muni) Bond Research, Franklin Templeton Fixed Income. Find out what this means for investors in part one of this two-part muni credit research series.
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This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice. The views expressed are those of the investment manager and the comments, opinions and analyses may change without notice. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market.
Data from third party sources may have been used in the preparation of this material and Franklin Templeton (“FT”) has not independently verified, validated or audited such data. FT accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments, opinions and analyses in the material is at the sole discretion of the user.
Separately Managed Accounts (SMAs) are investment services provided by Franklin Templeton Private Portfolio Group, LLC (FTPPG), a federally registered investment advisor. Client portfolios are managed based on investment instructions or advice provided by affiliated subadvisors of Franklin Templeton. Management is implemented by FTPPG, the designated subadvisor or, in the case of certain programs, the program sponsor or its designee.
ETFs and ETPs trade like stocks, fluctuate in market value and may trade at prices above or below the ETFs/ETPs net asset value. Brokerage commissions and ETF expenses will reduce returns. ETF shares may be bought or sold throughout the day at their market price, not their Net Asset Value (NAV), on the exchange on which they are listed. Shares of ETFs are tradable on secondary markets and may trade either at a premium or a discount to their NAV on the secondary market.