Municipal bond mutual funds, it seems, can do no wrong.

When markets were euphoric at the prospect of economic recovery, people were pumping unprecedented sums of cash into muni funds.

Now that markets are concerned the recovery may be plodding, if real at all, people are pumping unprecedented sums of cash into muni funds.

Investors injected $933.4 million into muni funds that report their figures weekly during the week ended June 24, according to AMG Data Services.

Before this year, weekly cash flow into muni funds exceeded that level only 18 times, according to AMG data encompassing nearly 900 weeks since 1992.

This figure excludes certain fund families that report their figures monthly. For this reason, AMG considers the four-week moving average for all funds a more precise depiction of fund flows.

On that basis, cash is flooding muni funds at a clip of $1.71 billion a week.

That is 25% higher than the record four-week average before this year. Only in two periods before now has the four-week average exceeded $1 billion: mid-2008 and early 1993.

Not halfway through 2009, muni funds have already broken the record for annual inflows.

Fund flows lately have been indifferent to market sentiment.

Every week, AMG reports the amount of money that investors put in or take out of muni funds, and the amount of money muni funds gained or lost on the market value of their bonds.

In the last 25 weeks, muni funds have reported market gains on their holdings 13 times and losses 12 times. They have reported inflows from investors all 25 times.

The latest flows come in spite of what EPFR Global called a "reality check" in financial markets.

Stocks have finally sold off a bit after rising steadily for three months beginning in early March. The Standard & Poor's 500 Index is down 2.7% in the past two weeks.

The appearance of the phrase "green shoots" in news stories peaked in April, according to Google.

EPFR Global in its weekly report said risk appetites have shrunk as investors face "doubts about the timing of a recovery in the global economy."

The cascade of money this quarter out of safe havens and into stocks, bonds, and commodities slowed down generally last week, EPFR Global said.

None of this deterred investors from injecting more money into muni funds.

This year, muni funds have benefitted both when investors sought higher yield and lower risk.

"They're still concerned about risk, and for the most part munis tend to be a very safe asset class," said Jeffery Timlin, a portfolio manager at Sage Advisory Services.

At the same time, Timlin said, "people are having a hard time stomaching no return on their money" in money-market funds, which offer unassailable security and liquidity at a paltry yield.

Muni funds have attracted $31.3 billion in inflows this year at a herculean rate of $1.25 billion a week on average.

The record for inflows in an entire year is about $28.6 billion in 1993.

In less than half a year, muni funds have eclipsed their collective inflows from 1994 through 2005.

Despite the latest slug of cash, the industry will have to wait at least another week before reaching a milestone that seemed unlikely six months ago: record assets under management.

Muni funds reported assets of $395.6 billion, meaning the industry has grown almost 16% in less than a year.

The record is $397.55 billion, reached in September.

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