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Does Vanguard's Total Bond Market fund hold any tax free bonds? If it does hold a mix of taxable and tax exempt bonds, wouldn't it be a waste because you want to keep the tax inefficient taxable bonds in a tax advantaged account and the tax exempt bonds in a tax free one? If it does not, is there a Boglehead-approved fund that holds tax-exempt bonds?
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Total Bond Market doesn't hold municipal bonds for precisely this reason; holding munis in a tax-deferred account is a waste of the tax exemption.
If you hold your bonds in a taxable account and are in a high tax bracket, Vanguard has a variety of muni funds; they are not indexes (munis are hard to index because of the size of the market) but have very low costs. Intermediate-Term Tax-Exempt is probably the most natural substitute for Total Bond Market (similar duration, a bit more risk because Total Bond Market has a lot of Treasuries). If Vanguard has a muni fund for your state, using that state fund is likely to be worthwhile. If Vanguard doesn't have a fund for your state, a non-Vanguard fund is probably not worthwhile, as it will cost you more in extra expenses than it saves you in taxes.
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