The exodus of cash from municipal money-market funds took a breather last week.

Investors ploughed $3.83 billion into tax-exempt money-market funds during the week ended July 7, according to iMoneyNet.

It was the first inflow in four weeks and the second in seven.

This has been a rough year for money market funds as the combination of bare-bones yields and a resurgent appetite for risk coaxed money out of safe havens and into stocks and longer-term bond funds.

Investors have withdrawn cash from muni money market funds 19 times in 27 weeks.

Outflows for the year total almost $32 billion, including a staggering $47.13 billion withdrawal during the 23 weeks ended June 29. That outflow represented 9.4% of funds’ total assets at the beginning of the period.

Muni money market funds have shed more than $68 billion since reaching peak assets in August last year.

Meanwhile, municipal bond mutual funds have already broken the record for inflows in a year and are near their all-time peak for assets, according to AMG Data Services.

In its weekly report, EPFR Global said the roughly $3.6 trillion money market fund industry bled $137.5 billion during the second quarter.

By contrast, high-yield bond funds and stock funds attracted inflows during the second quarter.

Last week offered respite for a 504-fund industry that had lost almost 2% of its assets in the past six weeks.

Connie Bugbee, managing editor at iMoneyNet, said it is possible investors’ recently rediscovered distaste for risk scared some money back into money market funds.

This drop-off, or at least plateau, in risk tolerance starting last month is reflected in several parts of the market.

Since June 10, the Standard & Poor’s 500 Index is down 6.5% and the yield on the 10-year Treasury has plummeted 56 basis points. A gauge of volatility known as the VIX has swelled to about 32 from about 26 in the past two weeks.

Bugbee pointed out a piece of contrarian evidence: taxable government money market funds, which include Treasury bonds, suffered outflows of more than $12 billion last week.

These funds usually attract inflows during flights to safety, she said.

If last week’s inflow was a flight to safety, it’s possible investors chose tax-exempt funds over taxable government funds because of more attractive yields, according to Bugbee.

The average seven-day yield on government retail money funds was 0.04% last week. The tax-free yield was 0.13%.

Investors intent on squirreling money into safe havens may be picking the funds with less-low yields, Bugbee said.

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