A muni pioneer then. A muni leader now.
One firm, a complete suite of municipal solutions, expertise you can rely on.
We didn't just follow the muni playbook. We helped write it.
We launched the first state-specific, double tax-free fund in 1977. We've been leading ever since. As one of the largest US municipal bond managers, Franklin offers a full suite of tax-free solutions, leveraging 50 years of experience and expertise to navigate market cycles, with portfolios spanning national, state-specific, and state-preference strategies across different investment objectives and risk profiles.
Deep experience and expertise
Our team of over 40 investment professionals averages 20+ years of experience in municipal bond strategies, ensuring expert management in a large, fragmented market.
Unparalleled investment options
With over 60 municipal bond strategies we offer the widest range of solutions to meet investors’ unique tax-free income needs and goals.
Proven performance
More 4- and 5-star rated municipal strategies than any other investment manager.1 Franklin Templeton delivers not just variety, but performance that stands out.
Our full suite of municipal strategies
From national to state-specific to state-preference; short, intermediate, or long-term; high quality or high yield; tax-managed, tax-aware or laddered, we offer the broadest range of tax-free solutions for investors.
National strategies
| Fund name | Vehicle |
|---|---|
| Franklin Federal Limited-Term Tax-Free Income Fund | Mutual Fund |
| Franklin Short-Term Municipal Income ETF (FTMS) | ETF |
| Franklin Limited Maturity Municipal SMA | Separate Account |
| Western Asset Short Duration Municipal Income Fund | Mutual Fund |
| Western Asset Short-Term Muni Portfolios | Separate Account |
State-specific strategies
For investors seeking greater tax efficiency, we offer a full range of state-specific and state-biased strategies, tailored to align with individual state tax profiles. In addition, our municipal bond SMA platform supports fully customized mandates, including national portfolios with state-specific exclusions, providing flexibility to meet unique tax or investment objectives.2
Mutual Funds
Franklin Alabama Tax-Free Income Fund
Separately Managed Accounts
Alabama state-preference mandate available
How to choose the right municipal bond strategy
Choose a strategy based on your client’s income needs, risk tolerance, and tax situation.
Short duration
for clients needing liquidity or in rising rate environments
Intermediate/core
for steady, balanced tax-free income
High yield
for clients seeking higher income and willing to take more credit risk
State-specific
for clients in high-tax states seeking additional tax benefits
Want more? Access our muni strategies through SMA and ETF solutions.
SMA solutions
Every investor is unique, and so is our SMA approach. We offer a wide range of customizable options that include total return strategies, ladders, state-specific overlays, in-kind funding, tax-loss harvesting, and more. With more than 13,000 customized accounts and $15+ billion under management, we can find a solution to fit almost any investor need.
Active ETF advantage
The municipal bond market is constantly evolving. To truly stay head and maximize your potential, you need more than just broad exposure. Designed for investors seeking income, diversification, or risk management, our active muni ETFs provide the expertise and flexibility to help you achieve your objectives with confidence.
Expand your Muniverse
In the brief
On screen
Inside the muni market: Common misconception
In a complex, fragmented market, our deep research and diverse platform turn muni misconceptions into opportunity.
Resources
Our comprehensive municipal bond literature is designed to support informed investor discussions, offering insights into market trends, investment strategies, and the benefits of tax-free income solutions.
Find out why municipal bonds are a clear choice.
Discover the possibilities with Western Asset Management.
Explore the most comprehensive suite of municipal bond strategies — built for every investor, every vehicle, every need
Explore the benefits of investing with Franklin Templeton Fixed Income.
Take the next step
Let us help you determine the right municipal bond solution for your needs.
Start to tax optimize and personalize today
FAQs
How do municipal bonds fit into a broader fixed income or multi-asset portfolio?
Municipal bonds serve two complementary roles in a diversified portfolio. First, they deliver tax-advantaged income that reduces the after-tax cost of holding fixed income. Second, their historically low correlation to equities provides genuine diversification, reducing portfolio volatility without sacrificing income. Within the fixed income sleeve, munis add tax efficiency that can improve after-tax total returns relative to a taxable-only fixed income approach — an advantage that compounds over long investment horizons, particularly for high-income investors.
What is the difference between general obligation bonds and revenue bonds?
General obligation (GO) bonds are backed by the full taxing power of the issuing government and are generally the most secure credits in the municipal universe. Revenue bonds are repaid solely from the cash flows of a specific project — a toll road, hospital or water utility — making credit quality dependent on that enterprise’s operational performance. Essential-service revenue bonds (water, sewer, electric) tend to have stable coverage ratios; healthcare and transportation bonds carry more demand-cycle and competitive risk. Revenue bonds typically offer yield premiums over comparable GOs, compensating investors for the more complex, project-specific credit analysis they require.
What role does active management play in the municipal bond market?
Active management creates value in the muni market through mechanisms less available in more efficient asset classes. With 50,000+ issuers and limited institutional sell-side coverage, independent fundamental credit analysis can identify mispricings that persist longer than in corporate or equity markets. Active managers can also optimize yield curve positioning, manage call optionality, and respond to credit migration before it is reflected in ratings or prices. Passive strategies offer low-cost broad exposure but are market-cap weighted (allocating most to the most indebted issuers), include callable bonds without optionality adjustments, and cannot react to credit deterioration before market prices have already moved.
How should investors think about credit quality and credit risk in the muni market?
Municipal credit spans an exceptionally wide range — from AAA-rated state GOs to speculative-grade project finance — and the analytical framework differs from corporate credit. GO analysis focuses on taxable property base trend, debt per capita, pension funded ratios, and fund balance levels. Revenue bond analysis centers on debt service coverage, rate-setting authority, and competitive positioning. Ratings provide a useful starting framework but frequently lag fundamental credit changes in both directions — creating both unrecognized risk and mispriced opportunity. Given the muni market’s wide credit dispersion, the quality of credit research is a primary driver of long-term risk-adjusted returns.
Risks
All investments involve risks, including possible loss of principal. Fixed income securities involve interest rate, credit, inflation and reinvestment risks, and possible loss of principal. As interest rates rise, the value of fixed income securities falls. Liquidity risk exists when securities or other investments become more difficult to sell, or are unable to be sold, at the price which they have been valued. Active management does not ensure gains or protect against market declines. Portfolios focused on a single state are subject to greater risk of adverse economic and regulatory changes than a geographically diversified portfolio.
These portfolios may be non-diversified and may invest in a relatively small number of issuers, which may negatively impact the strategy’s performance and result in greater fluctuation in the value of the strategy’s shares. Derivative instruments can be illiquid, may disproportionately increase losses, and have a potentially large impact on performance. An investor may be subject to the federal Alternative Minimum Tax, and state and local taxes may apply.
Putnam funds are not exchangeable for other funds distributed by Franklin Distributors, LLC.
Franklin Distributors, LLC. Member FINRA/SIPC.
Important information
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.
Your clients should carefully consider a fund’s investment goals, risks, charges and expenses before investing. Download a prospectus, which contains this and other information. Your clients should read the prospectus carefully before they invest or send money.
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.
Footnotes
- Source: Morningstar. As of June 30, 2026.
Franklin Templeton had 26 municipal strategies receive a 4 or 5 star rating out of 65 rated funds. This was more funds than any other investment manager (out of 148) in the Morningstar US Municipal Fixed Income category.
The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products with at least a three-year history, and subject to change monthly. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk Adjusted Return measure that accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total return, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total return. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Ratings do not take into account the effects of sales charges and loads. Morningstar Rating is for the specified share class(es) only; other classes may have different performance characteristics.
©2026 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
- State-specific mandates include Arizona, California, Colorado, Connecticut, Florida, Louisiana, Massachusetts, Maryland, Michigan, Missouri, Minnesota, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Texas, Utah and Virginia. State-preference mandates include Alabama, Georgia, Hawaii, Indiana, Kentucky and South Carolina. Certain state-specific portfolios may not be available in all programs. Additional state-specific portfolios may be available upon request and are subject to review. Strategy availability may vary by firm. For those strategies available at your firm, please contact your home office for details.