The stream of cash into municipal bond mutual funds rebounded last week after a month or so of decidedly slowing inflows.

During the week ended Oct. 20, investors entrusted $420.6 million to municipal funds that report their figures weekly, according to Lipper FMI. It was the most robust flow of money into muni funds in four weeks.

Muni mutual fund inflows began to taper off sharply in late September after a summer revival.

All funds, including those that report their figures monthly, have averaged inflows of $150.6 million a week the past four weeks — the lowest since January 2009.

Preliminary numbers from the Investment Company Institute show investors deposited about $2.3 billion of new money into municipal funds in September.

Inflows have averaged nearly $5 billion a month since the end of 2008. Last year set the record for fund inflows with $69 billion, while this year is still on pace to be the second-strongest year on record.

“We certainly are continuing to get flows, but they’ve slowed,” said Duane McCalister, who co-manages a $420 million intermediate-term tax-exempt fund for Marshall Funds.

The market is still in a “secular demand for income” landscape, McCalister said, with benchmark interest rates very low and the Federal Reserve signaling more quantitative easing ahead.

“Trust me, they’re still looking for ways to generate income,” McCalister said late last week in a speech to retirees in Naples, Fla.

The reason inflows have moderated is not because appetite for municipal debt is vanishing, McCalister said, but because we are in a “risk-on, risk-off trading ­environment.”

People migrate to the safety of Treasuries and other high-quality, dollar-denominated fixed income to protect their money when they are frightened. When they see signs of improvement, investors shift to stocks and other riskier assets so as not to miss out on the rising financial tide.

The recent slowdown in fund flows reflects the latest “risk-on” trade, McCalister said. Since the end of August, the Standard & Poor’s 500 index is up 12.6%, and the measure of market volatility known as the VIX has sunk to under 20 from more than 27.

The risk-on trade has also somewhat hampered municipal bonds themselves, with yields on the benchmark triple-A 10-year bond jumping five basis points in the week covered in the latest Lipper report, according to Municipal Market Data.

Municipal bond mutual funds reported a market loss of $306.7 million during the week. With the net inflow exceeding the market loss, the municipal fund industry grew last week once again, this time to a record $527.8 billion.

The industry has grown 13.6% this year and 54.3% since the end of 2008.

Mutual funds now own 18% of outstanding municipal securities, compared with 14.5% at the end of 2008.

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