The pace of cash flowing into municipal bond mutual funds fell off a cliff last week.
Municipal funds that report their figures weekly reported just $284.1 million in new money from investors for the week ended March 24, according to Lipper FMI.
That is the weakest inflow since January 2009, when funds were first recovering from a disastrous period in which they coughed up more than $12 billion in about three months.
All mutual funds, including those that report their figures weekly, have been reporting inflows at a rate of $1.05 billion a week for the past four weeks, a decided slowdown from the massive inflows late last year. At its peak, the four-week average was nearly $3 billion.
The steepest decline was in short-term funds, which had commanded the lion’s share of municipal flows all year.
Investors may have been turned off by an unusually low yield on short-term municipals relative to Treasuries. The one-year triple-A municipal yields 65% of the one-year Treasury, according to Municipal Market Data.
Long-term funds and high-yield funds also reported sharp slowdowns.
Tax-free money market funds, whose outflows many fund managers say have been a major source of mutual fund inflows, reported outflows of $3.11 billion last week, according to the Investment Company Institute.
Tax-free money funds have bled $14 billion in the last five weeks.