Of the net £354m investors put into funds in August, a large part of it was driven by money going into index funds. Inflows into trackers doubled to £1.6bn, up from £860m in July.
By comparison, in a reversal of fortunes fixed income funds were left out in the cold. Investors pulled out £356m in August, the first outflows since October 2022, including outflows from all sterling fixed income sectors.
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Investors also fell out of love with responsible investments during the month, which saw them shed a record £448m, following a period of weaker sales.
Equity funds were the best-selling asset class, with inflows of £652m, followed by mixed asset funds, which that took in £481m, and money market funds, which attracted inflows of £29m.
The best-selling IA sector in the month was Global, with net retail sales of £368m, followed by Volatility Managed (£203m), UK Gilts (£174m) and Asia Pacific Excluding Japan (£112m). Global Equity Income, however, saw outflows of £66m, the first outflows since November 2021.
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The worst-selling IA sector in August was UK All Companies, which experienced outflows of £747m.
Chris Cummings, CEO of the Investment Association, said: "August, typically a quieter month, saw muted net inflows after a strong July. Consumer confidence about the economy remains unsteady with the impact being felt of the ongoing cost-of-living crisis."
Wage growth overtook inflation in June 2023, the first time since November 2021, Cummings pointed out, but he said "there is still a gap to be bridged between disposable income and investment activity".