At first, I was going to try to purchase individual municipal bonds, but decided, on the advice of an advisor, to go with tax exempt municipal funds. If you own individual bonds and need to sell before maturity, you have to sell in the secondary market, so they are not as liquid as a fund. There are also things to look at such as ratings and whether or not the bonds are insured. As another poster mentioned, there are different funding sources to pay back the bonds, which effects its risk.