Although tax-exempt funds lost significantly less than last week, they still suffered another week of outflows, losing $482.3 million for the week ending July 28, according to the Money Fund Report, a service of iMoneyNet.com of Westborough, Mass.

The 553 funds reporting settled at $508.01 billion this week versus $508.49 billion last week after significant outflows of $4.98 billion, the report said.

The average seven-day yield for the tax-exempt and municipal funds rose sharply to 1.67% from 1.13% on the heels of the news that Moody's Investors Service placed insurers Financial Security Assurance Inc. and Assured Guaranty Corp. on review for possible downgrade, according to the report.

The average maturity decreased by one day to 28 days.

Meanwhile, the 1,305 taxable funds in the report grew by $7.39 billion to $2.973 trillion, compared with last week when they grew $11.09 billion and settled at $2.965 trillion. Overall, all money market funds gained approximately $6.9 billion to settle at $3.481 trillion for the week ending July 29 - just shy of the all-time high of $3.490 trillion which was set on April 8. Last week, all money market funds gained a combined $6.114 billion, settling at $3.473 trillion.

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