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Below is the Mutual Fund Analyst Report for FMAGX.

BlackRock Municipal Insured C1MCMIX

Morningstar Rating

Fund Research and Analysis

by David Kathman, CFA

BlackRock Municipal Insured is still adjusting to seismic changes in the insured muni market.

Since Mike Kalinoski became this fund's manager in mid-2007, it has undergone such fundamental changes that it's tough to recognize as the same fund. These changes aren't a result of anything Kalinoski did; rather, they're an indirect result of the credit crisis, which caused the virtual collapse of the muni-bond insurance market. Read more

Kudos

The fund boasts the lowest expense ratio in the front-load muni insured subgroup.

Strong relative returns over the trailing five- and 10-year periods. Read more

Risks

The firms that insure muni bonds have come under severe pressure due to fallout from the mortgage crisis, hurting many of this fund's holdings.

The fund's average credit rating has fallen significantly because most of the firms that insure muni bonds lost their AAA credit ratings. Read more

Strategy

This fund invests at least 80% of its assets in insured municipal bonds and up to 20% in uninsured munis. Manager Mike Kalinoski tries to add value through duration adjustments, sector bets, and state bets, with the primary goal of generating as much yield as possible without endangering the fund's principal. Read more

Management

Mike Kalinoski became this fund's lead manager in July 2007 after the departure of Bob DiMella. Kalinoski was named comanager in December 2006 and had been part of the team for several years before that. Theodore Jaeckel was added as comanager at the same time, but he doesn't have much day-to-day input into this fund; his main responsibility is managing BlackRock High Yield Municipal MDYHX. Read more

Inside Scoop

This mutual fund is undergoing some significant changes due to the woes of muni-bond insurers; most notably, 20% of the fund is in uninsured munis, and the average credit quality has fallen. Read more

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