Investors continued to pour unprecedented sums of cash into municipal bond mutual funds last week, pushing assets further into record territory.

Muni funds that report their figures weekly posted an inflow of $903.9 million during the week ended July 22, according to AMG Data Services. The previous week's inflow was $937.9 million.

This figure excludes certain funds that report their figures monthly. All funds, including monthly reporters, have posted an average inflow of $1.45 billion a week for the past four weeks.

Before last year, nothing close to that rate had ever been registered. The highest four-week moving average of inflows from 1992 through 2007 was $1.13 billion, according to AMG.

Muni funds could attract not a penny for the rest of the year and still break the record for annual inflows.

"Retail demand has been steady and the open-end municipal bond funds continue to attract funds," Phil Fischer, muni strategist at Bank of America-Merrill Lynch, wrote in a report last week.

George Friedlander, managing director at Morgan Stanley Smith Barney, said demand from retail investors remains "extremely strong, with no letup in sight."

Bolstered by $23.88 billion in market gains and $35.98 billion in new money from investors in 2009, the municipal fund industry has grown to record size.

Funds reported $402.46 billion in assets under management on July 22. That represents a growth rate of 17.7% this year, the fastest pace of growth over any 28-week period since 1993.

Investors and fund managers have cited a number of reasons for these inflows. Returns on safe havens like money market funds are minuscule.

Investors burned by the stock market would like to play it safer with bonds. Tax rates appear to be heading higher, making the tax exemption of municipal debt more attractive.

Whatever the reason, investors have continued socking money into muni funds regardless of what happens in financial markets - even the muni market itself.

In the 29 weeks this year, according to the Municipal Market Data scale, the yield on the 10-year triple-A has strengthened 17 times, weakened 11 times, and been unchanged once.

Investors plowed money into municipal bonds in every week.

Similarly, the Dow Jones industrial average has risen in 15 weeks and fallen in 14. A measure of volatility known as the VIX ticked up 11 weeks and down 18 weeks.

None of it has appeared to influence muni fund flows.

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