The high-yield fund has its higher yield for two reasons: longer duration and lower quality. Both of these are fundamental risks with bonds. Duration is a measure of the interest-rate risk; if a fund has a six-year duration and the yields on its bonds rise by 1%, the fund will lose 6%. And quality is the risk that bonds will default (or be downgraded and be sold before they have a chance to default or recover). You can see the effect of both types of risks by comparing High-Yield Tax-Exempt, Long-Term Tax-Exempt (better quality but same duration), and Intermediate-Term Tax-Exempt in 2008.
Thus there is no free lunch. The high-yield fund has higher expected returns but more risk. If you are holding bonds to reduce the risk of an all-stock portfolio, you need more of the high-yield fund to get the same reduction.
It's still a fine fund as long as you recognize the risk. (The name is a misnomer; it isn't a junk-bond fund, but it has a higher yield than most other municipal-bond funds because it has very low expenses and medium-quality bonds.)