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Funds under management of UK domiciled investment funds stood at £391.3bn in May - 4 per cent up on the previous month but still 14 per cent lower than a year ago.

UK domiciled Isa funds under management amounted to £76.5bn, a 3 per cent increase on the previous month but 19 per cent down on May 2008 levels.

The UK domiciled investment fund Isas saw a net inflow of £312.4m in May, compared with the previous month's inflow of £672.4m and the previous year's outflow of £214.8m.

Meanwhile, the most popular UK domiciled Isa sector in May 2009 was Cautious Managed, which accounted for 20 per cent of gross Isa sales.

Of the £2.8bn net retail sales, £1.3bn went into bond funds and £984m into equity funds. Institutional holdings of unit trusts and Oeics saw an inflow of £1.0bn, half of which went into equities and most of the balance into bond funds.

The most popular sector in May 2009 was the Sterling Corporate Bond, accounting for 15 per cent of gross retail sales of UK domiciled funds. Furthermore, 90 per cent of the gross retail sales into this sector were via the intermediary channel.

It was the seventh month in a row that the Sterling Corporate Bond was the most popular sector, with an inflow of £717.9 m. The sector with the biggest outflows in May was Unclassified with a net outflow of £66.6 m.

Gross Isa sales were £810 m, with £355 m sold through fund supermarkets followed by £218 million through sales force/tied agents.

In regards to overseas funds under management, these were up 3 per cent on the previous month and broadly the same as the previous year's £17.4bn, standing now at of £17.5bn.

The overseas Isa assets of £297m were up 13 per cent on the previous month and down 15 per cent on the previous year.

Net retail sales of overseas domiciled funds in May this year saw an inflow of £136.4m, compared with the previous month's inflow of £168.6m and £154.5 m seen the previous year.

Net retail sales of overseas domiciled investment fund Isas saw an inflow of £1.7m in May, compared with an inflow of £2.8m the previous month and an outflow of £100,000 in May 2008.

Richard Saunders, chief executive of the IMA, said: "Retail and Isa sales continue to see strong inflows, with May's figures recording the highest net retail sales outside an Isa season since records began.

"The last six months alone have seen net retail sales of £10.6bn. This is much higher than the same period a year ago when net retail sales were just £1.9bn."