Last year's net retail sales were down some £12bn compared to 2015 after what the Investment Association called an "extraordinary and challenging" period, despite the year ending on a high.
Net retail sales for 2016 amounted to just £4.7bn, down from £16.8bn in 2015 and even lower than 2008’s £4.8bn - the previous low benchmark for sentiment.
The overall figure still paints a rosier picture than fund firms experienced through the year. Before November, the industry had only witnessed £1bn of flows, after positive sentiment at the end of the year - and a bumper December in particular - helped boost figures.
A large share of sales for the year came from net inflows for money market funds – reaching a record £2.4bn - and targeted absolute return vehicles, which had net retail sales of £5.1bn, in a sign of investor caution and industry developments.
Alastair Wainwright, fund market specialist at the Investment Association, which collated the figures, said: “Targeted Absolute Return was once again the best-selling sector with advisers and discretionary wealth managers driving flows into those funds.
“Money market funds also benefited from the regulated advice sector, with assets growing by 40 per cent in 2016 due to increased allocations to cash.”
It was December which was the star of the show, ending the year "on a high" according to the trade body. The £2.7bn of net sales was the highest in 2016 and saw all asset classes bar property witness net inflows.
Fixed income funds enjoyed net retail sales of £611m, marking a reversal of fortunes after suffering £202m of net retail outflows in November, with the much discussed IA Sterling Strategic Bond peer group taking some £264m - the highest in over 12 months.
Emerging Market debt funds, however, still seemed plagued by Donald Trump's election victory, witnessing the second consecutive month £100m plus net outflows.
Continuing a reversal of fortune, equity funds enjoyed a second month of net inflows, amounting to £570m in December, having previously suffered 10 months of consecutive net outflows in 2016.
Funds in the IA Global sector continued to lead the way, with £381m of net inflows for the month, making it the second most popular sector. Equity outflows in December were concentrated in the European space despite sentiment seemingly turning in the opening weeks of 2017.
The UK All Companies sector witnessed somewhat muted demand, bringing in £30m of sales, but a change in fortune after £5.4bn of net outflows before November.
However, property funds remained in the doldrums at the end of a dramatic year which saw a number of them suspend trading following the Brexit vote. In December the sector endured its 11th month of net outflows in 2016, taking net retail outflows for the year to £2bn, compared with a net inflow of £2.7bn in 2015.
Targeted Absolute Return retained its place as the best selling sector, seeing another £422m of net sales in the month.
