This is feeding through to the corporate sector and making equities more popular. Stock markets have been performing strongly over the last few months and experts are beginning to ask whether we are about to enter a bull market.

The FTSE 100 has risen by 100 per cent over four and a half years, and fund managers believe that more gains can be achieved from UK equities.

There are several reasons for this, not least the lesser returns from other assets, as bond yields rise, and other types of investment do worse. In addition to the general economic improvement, technological change has yet to be commercialised and equities have proven to be a useful hedge against inflation.

In Europe, equity funds are also seeing the benefit of positive investor sentiment. Flows into European funds are rising, against a drop in funds moving into bonds.

European large-cap was the most popular Morningstar fund in the month of August, with more than £1bn moving into them.

Investor sentiment towards eurozone stocks appears to have changed; the exception seems to be UK large cap funds, some of which have been suffering outflows.

As European and UK economies start to shake off the after effects of the recession, so investors can take a serious look at these funds and make a serious case for getting back into them.

Melanie Tringham is features editor of Financial Adviser