Credit is once again the story when it comes to municipal bond mutual fund performance in the fourth quarter, as those that stayed away from lower-rated paper performed the best, fund managers and analysts said.

According to data compiled by Lipper Inc., the higher the quality of the bonds in the mutual fund, the better it fared. Cumulative total reinvested performance for the 53 insured muni funds with $11.2 billion of assets under management was 0.57%. For general muni debt funds — Lipper tracks 248 funds with $82.3 billion of assets under management in the category — the return was 0.07%. For the 105 high-yield funds with $46.9 billion the return was negative 2.51%.

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