How do I select a municipal bond fund from the veritable maze of available tax-free funds out there?

Question

I'm trying to narrow my search for one or perhaps several tax-free bond funds to add to my portfolio. I tend to like the closed end variety. I've checked out offerings from Blackrock funds, Nuveen, Putnam, Morgan Stanley, Eaton Vance, et al. Man, there sure are a perplexing variety of funds to pick from! Many of them look like clones of each other, with only slight differences in the fund's name.

What would be some filtering criteria that I should apply to selecting a tax free fund? NAV premium/discount, dividend history (increase or decrease - how to find this?), what happens to muni funds if the Fed lowers - or raises - interest rates, etc. Actually, I'm just about ready to give up and use a dart board to select a fund! Any professional help would be appreciated. (I don't need a state-specific fund either, as my state does not have a state income tax.)

Answer 1

since all bond funds are buying from the [basically] same pool of issues, I would critically compare their operating expenses. Secondarily, I would look at their long term performance - at least 5 years- and their turn over rate. Turn over can mean a significantly higher tax event for you even if the overall performance is only mediocre.

There are ETFs and other close-ended funds that are dividend driven that might deliver as high a return as munis-Wisdom Tree and First Trust come to mind; I might look at RNE, PEO, USA, ASG, IFN, IAF or MIC for their growth and a very nice dividend to boot...[personally, these are some of my favorites, and have replaced most of my muni funds]

as far as "safe and reliable" like a muni fund
maybe look at a good G&I fund
You'd get a bit of growth with your income-again, almost too many to list, but Money, Kiplingers, Barrons, even Consumer Reports all run an end of the comparison for "best" in a given category.

good hunting...