Each passing week confirms the “new normal” in municipal bond mutual funds.

Once again, investors took cash out of their money market funds and entrusted it to muni mutual funds. And once again, they did so at a rate that is historically high but not as high as it was earlier this year.

During the week ending Dec. 2, investors poured $818.6 million into municipal bond mutual funds that report their figures weekly, according to Lipper FMI.

Though that figure is in the top 10% of weekly flows since Lipper started keeping track in the early 1990s, it underscores a noticeable slowdown.

This was the eighth consecutive time the weekly inflow was under $1 billion, following a streak of 11 weeks in which the inflow exceeded $1 billion.

The figures are only for funds that report their numbers weekly. Some fund families report their numbers once a month.

All of the industry’s funds have reported an average of $1.09 billion in inflows a week for the past four weeks. At its peak in October, the four-week average reached almost $2.9 billion.

The story in 2009 has been investors growing impatient with bare-bones yields on money funds and putting their money to work in mutual funds.

According to iMoneyNet, tax-free money market funds yield just 0.04%, an all-time low.

The Investment Company Institute said investors have ferried $82 billion from their money market funds this year, and according to Lipper they have bestowed $73.59 billion upon muni mutual funds.

The tax-free money market fund sector has shrunk 16.8% to $407 billion in assets this year, while the municipal bond mutual fund industry has grown 34.3% to $459.39 billion in assets.

The migration of cash out of safe havens and into mutual funds has bolstered the muni market this year and provided a vital foundation for demand even as municipalities face gaping budget holes.

In one of his daily commentaries last week, Thomson Reuters analyst Randy Smolik noted short-term municipal bonds continue to benefit from “distaste to keep cash in near-zero money market funds.”

In their outlook for 2010 this week, municipal strategists at JPMorgan. told investors to expect this trend to continue, just at a slower rate.

Many investors still cannot brook zero returns on their money and will reach for the yield on mutual funds, they said.

“In 2010, very low money-market yields should encourage more of this trend but likely at a more moderate pace given the amount that has already transferred,” JPMorgan strategists Alex Roever and Chris Holmes wrote in a report.

In a conference call Holmes said he expects an average weekly inflow of around $700 million in 2010, compared with this year’s average so far of $1.56 billion.

“We saw a little bit of easing of flows the last couple of months, but if you look at it from a historical perspective they’re still pretty strong,” he said. “I don’t expect to see the same sort of fund flows that we saw in July, August, and the early part of September.”

Funds averaged more than $2 billion in inflows a week during that time.

Although short-term bond funds have been the biggest beneficiaries of the migration of cash from money market funds, Holmes said it’s encouraging that high-yield funds, California funds, and long-term funds have not coughed up much of the cash they attracted at the peak of fund flows.

“We haven’t seen mass exodus out of high-yield funds; we haven’t seen people pouring out of long-term funds,” he said. “There hasn’t been any sort of panic, per se.”

In its weekly report on fund flows, EPFR Global noted a “spike in risk-aversion,” with more conservative funds absorbing more money than riskier funds.

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