Municipal bonds had a solid year in 2015. Judging by the group's fundamentals, the coming year should be similarly positive, said Robert Amodeo, head of municipal bonds at Western Asset Management.

"Tax receipts have come in stronger over the last handful of years, and austerity fatigue has not really settled in, so spending remains at moderate levels," said Amodeo. "There is some weakness in spots, but overall it's a healthy marketplace."

One of those weak spots clearly is Puerto Rico. The island's government is already struggling to meet its debt obligations and is seeking relief from creditors. Amodeo calls Puerto Rico's problems an "isolated event" and anybody who bought those bonds understood the risks. Amodeo said his only exposure is a small position of insured Puerto Rico Water and Sewer Authority debt.

He said Chicago and Illinois debt are the other big trouble spot. At least for the time being, he is avoiding those as well due to their massive unfunded pension obligations.

"In the near term, there is probably more bad news than good news coming out of that region, and so we would look for opportunities to buy into that ... thinking that they will ultimately right the ship and repay their debtholders," said Amodeo.

Finally, Amodeo said high-yield municipal bonds have performed extremely well in the past year, but may be getting too pricey for value investors, even though the fundamentals remain healthy. He said now may be a time to move more into the investment grade arena.

Amodeo's Western Asset Municipal High Income (LMHIX) - Get Report Fund is up 3.3% thus far in 2016, according to fund-tracker Morningstar. The $784 million fund has returned an average of 7.3% annually over the past five years, putting it in the 59th percentile of Morningstar's high-yield municipal bond category. The trailing 12-month yield for the fund is 4.4%, according to Morningstar.