A Bronze-Rated Muni Fund With a Solid Team

Beth Foos: Wells Fargo Intermediate Tax/AMT-Free Fund is backed by a stable, well-resourced team that's delivered solid returns. That, along with the fund's attractive fees on most of its share classes, supports a Morningstar Analyst Rating of Bronze.

Managers Robert Miller and Lyle Fitterer have been comanaging this fund for over a decade. Miller came to Wells Fargo from American Century in 2008 and takes the lead here. Fitterer leads the firm's tax-exempt fixed-income team and also serves as the co-head of its global fixed-income platform. The two managers tap a variety of tools to build this portfolio, including moderate adjustments to duration and yield-curve positioning. While this fund's duration typically stays close to that of its index, Miller is more adventurous when it comes to credit risk. He relies on a talented group of credit analysts to uncover undervalued securities and will invest in out-of-favor sectors when he believes there's value there. For example, he generally favors midquality bonds over AAA-rated bonds prevalent in the fund's benchmark.

Investors should note, though, that although the fund's credit-sensitive style can boost returns when muni markets are strong, they can also sting when markets get rocky. That said, the team has shown restraint and seems to be willing to lighten up on credit risk when valuations aren't compelling. That approach has generated solid results over the long haul, with the fund's 10-year annualized gain topping roughly two thirds of category rivals.