Property funds accounted for 21 per cent of net retail fund sales in the first nine months of this year and the sector attracted record net retail inflows of £956m in the third quarter.
The Investment Management Association says net retail inflows into property funds were £2.4bn in the first nine months of this year, beating the next best performing sector, UK equity income, by 6 per cent.
Ninety-one per cent of all property fund sales were made through intermediaries.
Cautious managed was the most popular fund of fund sector, accounting for total net inflows of £225m in the third quarter.
Retail fund of fund inflows slowed slightly in the third quarter but still represented a fifth of all retail inflows over the last nine months.
Ethical funds under management rose by 21 per cent in the year to £4.5bn in total although net retail sales in the third quarter were down by 12 per cent on the previous quarter at £23m and down by 18 per cent on the same quarter in 2005.
The figures also reveal that tracker funds saw outflows of £32m in the third quarter compared with an inflow of £27m in the second quarter . Fifty-one per cent of tracker fund sales were through intermediaries.
Chief executive Richard Saunders says: “The first three quarters of 2006 have seen unprecedented inflows into property funds sitting within the specialist sector, reaching 21 per cent of retail sales so far in 2006.”