Tax-exempt money market funds attracted $3.60 billion of inflows in the week ended July 8, the most in six months, as retail investors responded to volatility in the long-term market. The inflow boosted total net assets to $265.98 billion, according to The Money Fund Report, a service of

"There has been a lot of news coverage about money coming out of bond funds recently and there may be some nervousness out there regarding their value declining in a projected rising interest-rate environment," said Mike Krasner, managing editor of iMoneyNet Inc. "We have seen in the past that retail investors -- who dominate the tax-free fund universe, but not taxable -- tend to seek shelter in MMFs at times of market uncertainty or volatility."

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