Mutual fund investors added $31 billion in net new cash to U.S. bond mutual funds in August at the same time that domestic equity mutual fund flows fell off by $12.2 billion, Strategic Insight (SI), a business information provider to the fund industry, reported Tuesday.

Driven by ongoing demand for bond funds in open-end and closed-end mutual funds, excluding ETFs and funds underlying variable annuities, August’s $20 billion of net inflows were a slight improvement over the $19 billion of net new flows seen in July.

Bond funds saw net inflows of $31 billion in August, as investors continued to demand short- and intermediate-maturity bond funds for alternatives to low-yielding cash vehicles and general bond funds as less volatile means of participating in global financial markets, according to an SI news release. Bond fund flows in August were led by corporate intermediate-maturity bond funds and global general corporate bond funds. Overall, taxable bond funds drew roughly $26 billion in net investments in August and muni bond funds attracted $5 billion.

Stock market volatility along with economic and employment uncertainty dampened demand for equity funds this summer. As a result, equity funds saw “modest” net redemptions of $11.5 billion in August, according to Strategic Insight’s Simfund database. These outflows represented less than 0.1% of equity fund assets. A total of $7.2 trillion is invested in U.S. stock and bond funds.

“Risk-averse investors are not yet willing to commit to domestic equity funds because the slow economic recovery hasn’t inspired enough confidence. We may not see consistent inflows to U.S. stock funds until unemployment eases and economic growth sparks higher interest,” said Avi Nachmany, SI’s director of research, in a statement.

Separately, Strategic Insight estimated that investors withdrew a net $778 million from U.S. exchange-traded funds (ETFs) in August, the first month to see aggregate ETF net outflows since January 2010. U.S. ETF assets ended July at $812 billion.

Also in August, U.S.-based international/global equity funds saw net inflows of nearly $700 million.

Read about SI’s reported inflows for July from the archives of InvestmentAdvisor.com.