These are the top funds in five major categories, ranked according to three-year returns. We primarily consider funds with managers in place for at least three years; the only exceptions are managers with at least three years’ experience in a similar capacity. We don’t rank funds with frontor back-end loads greater than 3 percent or funds that are closed to new investors, have less than $25 million in assets, have minimums of $10,000 or more, have trust restrictions or are single-state muni-bond funds. All data as of 10/31/10.

Source: Morningstar, Bloomberg

The Louis Rukeyser Honor Roll
Funds that have been on The Rukeyser 100 more than 80 percent of the past three years (at least 29 out of 36 months) make it onto The Louis Rukeyser Honor Roll. Their names are in green and marked with laurels.

On the Move
We saw a few changes in our Tax-Free Income category, as shorter-term funds gained on those with longer durations. Many blame continuing credit worries for the downturn in municipal (muni) bonds, but the real culprit has been a huge uptick in supply. Although the Rukeyser 100 doesn’t entirely reflect this trend, more than $20 billion in new issues came to market in a single week in November. Municipal issuers tried to tap relatively cheap sources of funding to plug holes in their budgets. A bump in Treasury yields also prompted investors to sell off their muni holdings in favor of higher yields that carried lower credit risks.

While shifting sentiment regarding muni funds may be disheartening, we would take advantage of this pullback to add short- and intermediateterm municipal funds to your portfolio. We don’t expect much in the way of price appreciation in the coming months, but many muni funds look like bargains. Good deals can also be found in exchangetraded funds, some of which trade at discounts to net asset value.

Funds Added This Month
Queens Road Small Cap Value
Select Fund
Lazard US Small-Mid Cap Equity Open
DGHM All-Cap Value Investor
Janus Balanced T
Matthews Asia Pacific
Buffalo International
Tocqueville International Value
CM Advisors Fixed Income
Forward International Fixed Income
Payden Global Fixed Income
Schwab Tax-Free Bond
Vanguard Interm-Term Tx-Ex Inv
Dreyfus Municipal Bond

Funds Dropped This Month
TCW Small Cap Growth N
Aston/Optimum Mid Cap N
Janus Triton T
Nicholas Limited Edition N
Berwyn Income
T Rowe Price Latin America
USAA Emerging Markets
Vanguard Emerging Markets Stock
Index
Vanguard L/T Investment Grade
Fidelity New Markets Income
T Rowe Price Emerging Markets Bond
Baird Intermediate Muni Bond
DWS Intermediate Tax/AMT Free A
DWS Managed Municipal Bonds A