Net retail sales have fallen by 40 per cent in 2011 to stand at £18bn, according to figures from the Investment Management Association.
The figure is down from the £29.3bn recorded in 2010 with the IMA citing a more cautious stance in the second half of 2011 on the back of the eurozone crisis.
Investors poured money into the former IMA cautious managed sector and balanced funds last year as the eurozone crisis dominated sentiment, the latest statistics show.
The IMA says the cautious managed sector was the highest selling space of 2011, with net retail sales amounting to £3.4 billion over the 12-month period.
The IMA £ strategic bond was in second place with net sales of £2.8 billion, followed by the global sector with £2.2 billion.
In terms of sales by asset, balanced funds led the pack with net retail sales of £5.6 billion. The £4.5 billion inflows to bond funds put that class in second place.
The largest outflows were witnessed in the Europe excluding UK sector, which lost £679m in 2011. Asia Pacific excluding Japan and European smaller companies also saw high outflows.
Furthermore, £100m was withdrawn from money market funds – the only asset class to see net retail outflows across the year.
IMA chief executive Richard Saunders says 2011 was “a year of two halves”, with the opening six months maintaining the strong sales of 2009 and 2010.
“Investors turned much more cautious in the second half of the year, perhaps unsettled by the eurozone crisis,” he adds.
“This caution was reflected also in asset choices, with some outflow from equity funds in the second half and money going instead into bond funds and balanced funds.”
The IMA Cautious Managed sector was replaced by the Mixed Investment 20 – 60 per cent Shares sector on January 1.