M* Names Five Funds to Bet on for Muni Rebound
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Tuesday, September 10, 2013

M* Names Five Funds to Bet on for Muni Rebound

Morningstar's Russel Kinnel writes that investors should stop listening to the noise on municipal bond funds post-Detroit, especially if that noise comes from Meredith Whitney, whose predictions have been significantly off.

Kinnel provided a list of five funds that investors can use to bet on a rebound.

He suggests T. Rowe Price [profile] Tax-Free High Yield, which has a Morningstar Gold rating. Kinnel said it's crucial for a high-yield muni fund to be managed by a firm with analyst breadth, as it's especially important to do deep analysis of each of the fund's holdings. The fund is down 7.5 percent year-to-date.

He also suggests Fidelity [profile] Municipal Income, which has less credit risk than the T. Rowe fund and skilled management, and Vanguard [profile] High-Yield Tax-Exempt, that is so cautious it doesn't qualify for the Morningstar muni high-yield category. It's been down only 5.9 percent this year.

Kinnel is a fan of Vanguard's muni funds. He lists two more: Vanguard Limited-Term Tax Exempt and Vanguard Short-Term Tax Exempt.

To read more, click here.

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