Mutual funds continue to be a dominant force in the municipal bond market, with tax-exempt assets of the funds growing to $161.1 billion during the second quarter of 1992.

The $15.6 billion rise in mutual fund holdings from the previous quarter means that for the first time in recent history the funds now surpass property and casualty insurance companies as the second largest holder of tax-exempt securities, according to the Federal Reserve's Flow of Funds Accounts.

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