The debt securities category will always be the first choice for risk-averse investors because this class of instruments provides a regular income flow at low levels of risk. Income from regular dividends helps to ease the pain caused by plunging stock prices. When considering the safety of capital invested, municipal bond mutual funds are second only to those investing in government securities. In addition, the interest income earned from these securities is exempt from federal taxes and in many cases from state taxes as well.

Below we will share with you four top-rated municipal bond mutual funds. Each has earned a Zacks #1 Rank (Strong Buy)and is expected to outperform its peers in the future. Investors can click here to see the complete list of funds.

MFS Municipal Income A1 (MMIDX - Free Report) seeks return through tax-free income and growth of capital. MMIDX invests the bulk of its assets in municipal securities that are believed to provide interest income free from federal income tax. The fund may invest more than one-fourth of its assets in municipal instruments that are related to education, healthcare, utilities and housing. MFS Municipal Income A1 returned 5.1% over the past three years.

As of October 2016, MMIDX held 1,025 issues, with 1.15% of its assets invested in Tobacco Settlement Fing Corp N Asse 4.5%.

American Century High-Yield Muni Investor (ABHYX - Free Report) invests the lion’s share of its assets in municipal securities that are expected to provide interest payments free from federal income tax. ABHYX invests in high-yield securities. Also, ABHYX may invest in securities, returns from which are not exempted from the federal alternative minimum tax. American Century High-Yield Muni Investor is a non-diversified fund that has a three-year annualized return of 5.7%.

ABHYX has an expense ratio of 0.60% compared with the category average of 0.99%.

Nuveen High Yield Municipal Bond A (NHMAX - Free Report) seeks high tax exempted current income. The fund invests a major portion of its assets in municipal bonds that provide tax free return. It primarily invests a minimum of 65% of its assets in bonds that are ranked between low and medium quality. It may also invest a maximum of 10% of its assets in municipal bonds that are categorized as defaulted bonds. Nuveen High Yield Municipal Bond A returned 8% over the past three years.

John V. Miller is the fund manager and has managed this fund since 2000.

Fidelity Advisor California Municipal Income A (FCMAX - Free Report) invests a large share of its assets in municipal debt securities that are rated as investment-grade and are expected to pay interest income free from federal and California personal income taxes. FCMAX seeks tax-exempted high current income. The fund invests a minimum of one-fourth of its assets in municipal securities. Moreover, FCMAX’s investments include securities across a wide range of market sectors irrespective of maturity durations. Fidelity Advisor California Municipal Income A has a three-year annualized return of 4%.

FCMAX has an expense ratio of 0.80% compared with the category average of 0.93%.