Pacific Investment Management Co.’s high- yield municipal-bond mutual fund is jockeying for the top returns of 2015 after picking winners among pockets of distress. Here are the calls that put it there:

Puerto Rico, the junk-rated Caribbean commonwealth saddled with $70 billion of debt and a stagnant economy? Stay away.

Chicago, which lost its investment grade from Moody’s Investors Service in May because its pensions are underfunded by $20 billion? Jump in.

Tobacco bonds, 80 percent of which Moody’s predicts will eventually default as cigarette consumption declines faster than anticipated? A buying opportunity.

“Those were our big credit decisions,” said David Hammer, who co-manages the $583 million fund with Joe Deane in New York.

The fund returned 5.9 percent through Friday, continuing a neck-and-neck race with Invesco Ltd.’s high-yield muni portfolio for the first-place title among open-end funds with at least $100 million in assets, data compiled by Bloomberg show.

Together, the decisions are a microcosm of the year that was in the $3.7 trillion municipal market. Bond buyers sought extra yield as interest rates remained near generational lows, yet many were hesitant to invest in Puerto Rico and Chicago until their financial paths became clearer.

Zero Puerto Rico

In Puerto Rico, the way forward only got murkier in 2015. So Pimco kept its allocation to commonwealth bonds at zero as Governor Alejandro Garcia Padilla said the island needs to restructure its debts to emerge from a severe fiscal crisis. This month, he said the U.S. territory could default on Jan. 1, when almost $1 billion of interest is due.

It took the Puerto Rico Electric Power Authority more than a year to reach a tentative agreement last week with bondholders and insurers to lower its $8 billion debt, showing how difficult such talks are without the threat of filing for bankruptcy. Getting Chapter 9 extended to the commonwealth hasn’t gained traction in Congress. The U.S. Supreme Court in 2016 will rule on the island’s Recovery Act, a measure allowing for the Puerto Rico’s publicly owned corporations to restructure debt that was struck down in court.