Even the most uninviting yields ever on short-term municipal debt cannot stem the tidal wave of cash flooding short-term municipal bond mutual funds.

Investors have plowed an average of $2.13 billion a week into muni funds for the last four weeks, according to AMG Data Services, a new record.

The record four-week average prior to this year was $1.37 billion.

Funds that report their figures weekly posted an inflow of $1.28 billion during the week ended Aug. 12, the third straight weekly inflow greater than $1 billion.

Most of this cash is blitzing short- and intermediate-term funds. Among the 10 funds that have reported the heaviest inflows this year are two ultra-shorts, two shorts, two intermediates, and a limited-term fund.

Long-term funds, which constitute 58% of the industry's assets, have attracted less than 30% of the past month's inflows, according to AMG.

The rest is hitting short and intermediate funds in spite of yields many fund managers say are not enticing.

The yields on the two-year triple-A muni ducked below 60% of the two-year Treasury last week, registering the richest muni-Treasury ratio since Municipal Market Data started keeping track in the early 1990s.

In fact, at 0.71%, the two-year triple-A yields less than the two-year Treasury even after a 35% tax bite.

Peter Coffin, founder of Breckinridge Capital Advisors, said retail investors continue to prefer short and intermediate municipal debt because they are afraid of inflation.

Many investors remember the 1970s, Coffin said, a decade in which the consumer price index routinely spiked well above 10% year-over-year.

The CPI was flat in July, according to the Bureau of Labor Statistics, but Coffin claims many investors fear the government's stimulus and the Federal Reserve's quantitative easing programs will eventually prove inflationary.

Regardless of how appealing long-term yields are compared with Treasuries, Coffin said investors are loath to lock up their money for 30 years and risk a decay of purchasing power.

Chris Johns, who manages a $231 million Colorado state fund for the Aquila Group of Funds, anticipates at some point investors will grow impatient with the paltry yields on short-term munis and start moving into longer-term debt.

"I would expect that the preponderance of money that you've seen come into that short-intermediate range will probably slow down," he said.

It has not happened yet. Muni funds have attracted $43.44 billion from investors this year, a sum equal to 18% of estimated municipal issuance.

Indeed, the inflows over the past six months alone exceed by several billion dollars the inflows over any 52-week period since AMG started following this data in 1992.

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