Fund investors added $27 billion to U.S. stock and bond funds in April, up from the $23 billion they invested in March, according to Strategic Insight.

U.S. equity funds took in $6 billion in April, marking the fourth straight month of inflows for the category, showing continued optimism among U.S. investors despite geopolitical tensions and uncertainty about the federal budget. In the first four months of 2011, U.S. equity funds have received $42.2 billion of inflows.

It was the best start to a year since January-April 2006, when U.S. equity funds took in $65.4 billion.

Flows have been helped by the steady rise in stock prices, Strategic Insight noted. In the first four months of this year, the S&P 500 Index is up 9%, compared to 7% in the first four months of 2010. In April 2011 alone, the index rose 3%.

“The post-crisis wariness is starting to fade, and investors are cautiously returning to U.S. equity funds,” said Avi Nachmany, director of research at Strategic Insight. “The rise in confidence is still somewhat fragile, but if we continue to see signs that the economy is recovering, then we should see steady demand for U.S. equity funds in 2011.”

Taxable bond funds drew in $18 billion in April, the biggest month of inflows for the category since October 2010, when they took in $21 billion. Muni bond funds took in $4 billion in April, as continued worries about the balance sheets of states and municipalities continued to weigh on the sector, Strategic Insight said.

International and global equity funds saw nearly $7 billion in net flows in April, despite continued turmoil in the Middle East and North Africa.

Money market funds had outflows of $6 billion in April, lowering their total assets to $2.6 trillion.

“In the context of the current SEC deliberation about money funds’ $1 NAV assumption by their investors, it is important to recognize that most American mutual fund investors first entered the mutual fund market through owning a money market fund, and that reassurance of accessibility and liquidity led them to migrate up their personal risk curve to stock and bond funds. Reducing the appeal of money market funds ahead of the next ‘Black Swan’ could have negative implications for mutual fund investments in bonds and stocks as well.”

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