Net retail fund sales fell below £1bn for the first time in 18 months in May as the Euro area crisis hit investor sentiment, IMA data shows.
Sales of £948m last month were 56% lower than April and represent the lowest monthly total since November 2008.
Gross retail sales were 12% down month-on-month at £7.8bn, but retail repurchases - where investors sell their investments - were the second highest on record at £6.8bn.
Funds under management stood at £492.6bn at the end of May, 3.5% down on April's record £510.6bn, and the third highest level on record.
Meanwhile, all retail sales channels saw a fall in gross sales in May.
Gross retail sales for ‘other intermediaries' - primarily wealth managers and stockbrokers - fell 12%, to £3.7bn. Repurchases were up 13% to £3.7bn
Fund platforms saw an 8% fall in gross retail sales to £3bn and a 3% increase in repurchases.
Direct saw the biggest fall, with gross retail sales down 19% to £983m anda 29% fall in repurchases.
However, fund platforms increased their market share for the month to 39%, up 1% compared to April and up 5% from January this year, when the figures were first recorded.
Direct sales fell by 1%, while other intermediaries saw their market share stay the same, at 48%.
Absolute Return was the best selling IMA Sector in May, with net retail sales of £181m. Launched in April 2008, it has been in the top five selling IMA sectors for 21 out of 26 months since then.
Global Growth was the second most popular sector, followed by Cautious Managed, £ Strategic Bond and North America.
The leading asset class was ‘other' with net retail sales of £361m, largely driven by the Absolute Return sector.
Both net equity and bond sales fell to just over £100m. At £111m equity sales were the lowest since February 2009, while bond sales at £102m were the lowest since August 2008.
Net retail property sales came in at £96m, the lowest since July last year.
Ahead of the expected tax rises which were announced in last week's Budget, ISA sales reached their highest level since May 2000, totaling £503m.
So far this year, net ISA sales total £2.8bn, the highest January to May since 2001.
Overseas domiciled funds saw an inflow of £34 million in May 2010.
IMA CEO Richard Saunders says: "The results for May tell a mixed story. Net retail sales figures have dipped below £1bn for the first time since November 2008. ISA sales have, however, held up well.
"During a period of market uncertainty, fuelled by the euro area crisis and post the UK election, investors have chosen to invest mostly in sectors with more flexible investment strategies."
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