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Many investors and traders are looking for places to put their cash that they don't have committed to stocks, especially when most brokerage firms are paying less than one percent. One area that some are turning to is the tax free closed end funds, also known as CEFs. These are funds that hold municipal bonds, and may trade above or below the Net Asset Value, which is the value of the portfolio divided by the number of shares.

The nice feature about these muni CEFs is that almost all of them pay their dividends monthly, which means that you receive your investment back faster and can compound quicker.

Pitfalls to watch out for include high management fees, large Alternative Minimum Tax exposure, the amount of leverage that is utilized, and whether the fund is trading at a premium or discount. has recently come out with a list of over 200 of these tax free stocks (technically tax free CEFs).

Several of the California CEFs have been hit hard due to the state's financial woes, causing a few to sell at a decent discount to net asset value. For example, the Morgan Stanley California Insured Municipal Income Fund (NYSE:IIC) has a yield of 5.7%, exempt from both California state and Federal tax, and is selling at an 9.7% discount to net asset value. Most muni CEFs use leverage, and this one has about 31.1% leverage, which is lower than the average leverage use by muni CEFs in general at 34.75%. The management fee is a reasonable 0.51%, lower than the average of 0.7%. The fund was founded in 1992.

Michigan has been hammered also. The Nuveen Michigan Premium Income Municipal Fund (NYSE:NMP) yields 6.1%, and is trading at a 10.1% discount to NAV. Leverage is 33%, and the management fee is 0.65%. The fund has been paying dividends since 1992. Only 4.48% of the portfolio is subject to AMT.

BlackRock Municipal New York Intermediate Duration Fund (NYSE:MNE) has a yield of 5.2%, trades at a discount of 7.9%, uses 33.2% leverage, and has a management fee of 0.69%. The fund was founded in 2003.

To see the list of over 200 tax free stocks, which shows the symbol, yield, premium or discount, leverage, management fee, when founded, focus, and other information, go to

Disclosure: Author does not own any of the above. No investment or tax advice is expressed or implied. Check with your tax advisor before investing.