Beth Foos: The Wells Fargo Advantage Municipal Bond Fund is backed by an experienced team that focuses on research and valuation to gain an edge on its rivals. Their credit-intensive approach has fared relatively well over the longer term, earning it a Morningstar Analyst Rating of Silver.
This fund definitely requires some patience and won't appeal to those looking for a high-quality anchor for their muni portfolio. Manager Lyle Fitterer and his team will invest heavily in the mid- and lower-quality tiers of the market when they think the time is right.
For example, as of the end of March 2015, this fund’s combined stake in BBB-rated debt and below was more than 25% of assets. That often makes this fund one of the more aggressive options in its category when it comes to credit.
But the team will rein in that risk when they don't think that investors are being adequately compensated. That was the case in the rocky muni markets of 2008 and 2013, when restraint protected the fund from bigger losses.
Although investors might experience a few bumps along the road, this fund’s long-term results have been impressive. As of the end of May, its 10-year annualized return of 5.2% has beaten 95% of its category peers.