Net retail sales slumped nearly 40% last year to their lowest level in three years, according the IMA's annual figures.
Equities were the most affected, with the asset class pulling in just £3bn - less than half the sales of £6.9bn it saw in 2010.
Overall net retail sales were £18bn for the year, down from £29.3bn in 2010, a 38.5% fall.
Although the year started strongly with £13.6bn of net retail sales in the first half, it dropped away sharply following the tumultuous summer. Net retail sales for the second half fell to £4.4bn - more than £10bn lower for the same period in the previous year.
Richard Saunders, chief executive of the IMA, said: "2011 was a year of two halves. The first six months saw a continuation of the very strong sales of 2009 and 2010, but investors turned much more cautious in the second half of the year, perhaps unsettled by the eurozone crisis.
"This caution was reflected also in asset choices, with some outflows from equity funds in the second half, and money going instead into bond funds and balanced funds."
Overall funds under management also declined falling to £571bn at year end, down 3% on the end of 2010.
As Saunders pointed out balanced funds were the best sellers of the year with £5.6bn in net retail sales with the Cautious Managed sector - which has now been split - being the most popular.
Bonds were the second best-selling asset class with £.45bn piling in as investors shunned equities.
However, sales in overseas funds broke new records with UK investors buying £1.7bn - the highest since records began in 2007. This is a jump from the £1.4bn in 2010.
Saunders added: "Another feature of 2011 was the continued growth in the market share of funds domiciled outside the UK. They saw their largest inflows on record, and market share at the end of the year was 5.4% compared with 3.7% only four years previously."
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