Cash influxes into municipal bond mutual funds continued last week as fund assets gained steadily.
Investors entrusted $316.9 million to muni funds that report their figures weekly during the week ended April 15, according to AMG Data Services.
This was the 15th straight weekly inflow, according to the Arcata, Calif.-based fund tracker.
Muni funds are on the road toward recovery after suffering a bloodletting last year.
Assets at all muni funds, including those that report figures monthly, shrank from an all-time high of $397.55 billion on Sept. 10 to as low as $336.94 billion on Dec. 18.
During that period, investors redeemed more than $9 billion from municipal funds. Compounded with that, funds sustained market losses of $49.46 billion during those 14 weeks.
A record rate of inflows and a rally in the muni market have reversed the trend in 2009 and pushed assets back up to $370.52 billion.
Since the beginning of the year, investors have poured more than $14 billion into muni funds. Further, funds have enjoyed a similar amount of market appreciation. Market gains have averaged 0.27% of assets a week this year, while inflows have averaged 0.26% of assets.
"It's clearly an indication that investors are looking at after-tax yields that relative to Treasuries are extremely attractive," said Bob Adler, president of AMG Data.
Based on the Municipal Market Data yield curve, triple-A 10-year munis yield 104.6% of 10-year Treasuries. Until last year, triple-A 10-years never yielded more than 98% of counterpart Treasuries.
On a tax-equivalent basis, assuming a 35% tax rate, the triple-A 10-year yields 161% of the Treasury. By comparison, that ratio was at 126% two years ago.
Adler pointed out the $11.6 billion in outflows in the fourth quarter was the heaviest outflow in history. Conversely, the $13.9 billion in inflows in the first quarter was the heaviest inflow in history.
Investors are now putting money into municipal funds at a rate Adler has never seen since he started tracking fund flow data in the early 1990s.
"Those types of numbers have not been experienced before," he said.
The stability in muni funds comes amid signs of a potential thaw in broader financial markets.
The Standard & Poor's 500 Index is up 20% from its nadir on March 9. Goldman Sachs Group Inc., Citigroup Inc., Wells Fargo & Co., and JPMorgan Chase & Co. all beat expectations for the first quarter.
A measure of volatility known as the VIX on Friday hit its lowest reading since September.