"Give muni bonds a good look." says Richard Moroney in Dow Theory Forecast, a leading "blue chip" newsletter that has been publishing for over five decades, who offers a trio of Vanguard funds for investors seeking safety and income.

The advisor explains, "Municipal bonds are showing signs of life, presenting investors with an intriguing opportunity." Here, he review the situation and offers some favorite investment vehicles.

"Muni bonds usually yield less than Treasurys because interest payments from municipals are exempt from federal income taxes.

"But in today's topsy turvy market, intermediate-term municipal bonds now yield around 3.7%, versus 3.6% for 10-year Treasurys. A tax-free yield of 3.7% is the equivalent of a taxable yield of 5.5%, assuming a 33% federal tax bracket.

"Uncertainties about the economy and credit concerns have weighed on bonds, lowering prices and raising yields. Hedge funds have also dumped muni bonds in an attempt to cover trading strategies gone sour.

"Long-term, municipal bonds deliver dependable returns, losing money only once in the past 10 years - a 2.1% decline in 1999. Bond prices tend the year ahead. Finally, should a new president raise taxes, municipal bonds would become even more attractive.

"Very conservative investors might consider a tax-exempt money-market mutual fund offered by an investment company. The funds, with share prices fixed at $1, are not insured like bank accounts but are highly liquid and regulated by the Securities and Exchange Commission.

"The average fund yields 2.6%, putting the taxable-equivalent yield at 3.9% based on a 33% tax rate. One standout is Vanguard Tax-Exempt Money Market Fund (VMSXX), which yields 3.0% with a taxable-equivalent rate of 4.5%. The fund has a $3,000 minimum investment.

"Investors willing to take on a bit more risk in exchange for potentially better performance should consider
short-term municipal-bond funds. Share prices of such funds fluctuate, meaning they can gain or lose money.

"An excellent choice is Vanguard Limited-Term Tax-Exempt (VMLTX), yielding 2.9% with a taxable-equivalent rate of 4.3%. The fund has a 0.15% annual expense ratio and requires a $3,000 initial investment.

"Vanguard Intermediate-Term Tax-Exempt (VWITX), a longtime Forecasts favorite, seeks a higher level of current income with moderate risk. The fund holds mostly intermediate-term investment-grade bonds, with an average maturity of less than seven years, and has declined in only two years since 1993.

"The fund yields 3.6%, putting the taxable-equivalent yield at 5.4%. Vanguard Intermediate-Term Tax-Exempt charges a 0.15% expense ratio and requires a $3,000 minimum investment."

Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.