Cash continued pouring into municipal bond mutual funds at a record pace last week as investors once again ferried money out of safe havens and put it to work elsewhere.

Muni funds attracted cash for the 21st consecutive week during the week that ended May 20, according to AMG Data Services.

Funds that report their figures weekly posted a collective inflow of $1.13 billion, the strongest inflow since May 2006 and the 10th strongest since AMG began tracking fund flows in the early 1990s.

Among all funds, including those that report monthly, inflows have totaled $22.51 billion this year. Funds have also posted $26.02 billion in market appreciation.

Funds are garnering cash at a rate of $1.76 billion a week based on the four-week moving average, according to AMG, by far the most powerful rate of inflows the sector has ever seen.

The result is total fund assets have rebounded to $390.85 billion from a low of $336.94 billion in mid-December.

Munis are benefiting from a widespread exodus from safe havens and into riskier and higher-yielding assets.

While cash is surging into state and local government bond funds, it is fleeing money-market funds.

Money-market funds are safe havens that often yield well less than 1%. Investors pulled another $20 billion from the $3.392 trillion money-market industry last week, according to AMG.

Josh Gonze, portfolio manager at Thornburg Investment Management, said investors are "sick and tired of earning zero" on money-market funds and are willing to assume slightly more risk for far more return.

"Investors worldwide are clearly anxious to put their money back to work," Brad Durham, managing director at EPFR Global, said in the fund tracker's weekly report.

Investors have yanked $78.2 billion from money-market funds this year, EPFR Global said.

High-yield bond funds have been one beneficiary of the stampede out of money-market funds, EPFR Global said.

The $37 billion high-yield muni fund sector attracted $204.5 million last week, according to AMG.

In anticipation of just that, Thornburg rolled out the high-yield Strategic Municipal Income Fund last month.

Gonze said the fund has tripled its assets since launching.

"We went from a period of extreme aversion to risk to a period when there is some willingness to take on some risk," he said.

Munis are hardly the only beneficiary of investors' embrace of risk. The Standard & Poor's 500 Index jumped 2.2% in the week measured in this report and is up 32% since March 9.

Emerging-market equity funds are soaking up new cash from investors, EPFR said. Commodity sector funds have been cash-flow-positive for 11 straight weeks and consumer and health care sector funds are posting strong inflows, according to EPFR.

Buried in this enthusiasm is a caveat for muni investors.

EPFR Global senior analyst Cameron Brandt said in a report that investors may be using bond funds as a stopover before moving along to higher-yielding investments.

"These funds may be serving as an interim step for investors who want some return on their money, but are not ready to wade into global and emerging markets assets until the outlook for the U.S. and global economies becomes a bit clearer," Brandt wrote.

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