Municipal fund managers, still reeling from Detroit's bankruptcy, the surge in Puerto Rico yields and a midyear sell-off that was the worst in a quarter-century, are getting their portfolios ready for the next expected hurdle as 2014 fast approaches-another spike in interest rates.

They're turning to shorter durations, high-quality or alternative coupon structures-or a combination of these strategies-to protect their holdings from volatility prompted by expectations that the Fed will begin tapering its $85 billion-a-month economic stimulus program in the first quarter.

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