This Medalist Muni Fund Takes a Measured Approach

Elizabeth Foos: BlackRock's Bronze-rated National Municipal Fund is backed by a large and experienced team that's delivered strong returns over the long term. Walter O'Connor has been the lead manager on this fund for two decades. He works with his comanager Ted Jaeckel and a large staff that includes 18 dedicated credit analysts.

Although the team has a relatively wide mandate when building this portfolio, O'Connor has taken an increasingly defensive stance in recent years. So for example, the fund's duration--which is a measure of its sensitivity to changing interest rates--has come down nearly 50% from 2011. At the same time, the portfolio focuses on higher-quality bonds--with more than 80% of assets invested in bonds rated A or above as of last month.

While avoiding the lower end of the rating scale recently, this team continues to see value in longer-maturity bonds, which consequently have soaked up a significant amount of assets here. They balance that with meaningful stake in cash and short-term maturities.

Overall, this team's approach has served investors well. The fund's returns over the past five- and 10-year periods have topped most peers' in both the muni intermediate and long categories.

That, along with an improving expense profile, makes it a solid choice for muni investors.