Yes, nursing homes and enterprises that are really not "municipalities" but can issue municipal bonds are things to stay away from. Key is always what is the security, and what do the financial statements look like? All of the information is readily available at emma.msrb.org.
Puerto Rico was a disaster that most everyone saw coming, even those who were speculating.
The problem with the funds is that there are no guarantees. No guarantees of income, no guarantees of when you'll be able to sell and get your original principal back - these are things which are all guaranteed when you buy the individual bond. You are paying Vanguard more than the 0.09% for research and paperwork, because you are likely sacrificing yield and performance. I can appreciate that most folks have a fear of purchasing municipal bonds directly, especially since minimum purchase is 5 bonds and it takes a decent size portfolio to purchase enough municipal bonds to be meaningful. But history and the data speaks for itself.
Anyhow, if it works for you, that's all that matters in the end.
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