The firm saw its net sales double quarter-on-quarter, according to the latest Pridham Report, taking in a net £1bn in the three months to June 30.
BlackRock was second in terms of net sales, securing only £26m less than LGIM. Quarter-on-quarter, however, its net inflows fell £500m despite an increase in gross sales.
Helen Pridham, author of the Pridham Report, said: "LGIM did particularly well in the second quarter as its push to increase its distribution channels over the past two years paid off. It increased net business over 100 per cent, taking its quarterly inflows to a record level.
"Strong sales of its tracker funds were the major contributor. Among its actively managed funds, the L&G UK Property fund was a top seller."
Baillie Gifford was the report's most improved fund group, seeing an 150 per cent increase in its net sales compared with the first quarter. The firm was seventh overall, bringing in £421m due to strong demand for its Japanese and European equity strategies.
The fund manager, along with Jupiter, was a new entrant to the Pridham top 10. Jupiter recently reported £2.2bn of net sales in Q2 - making the first half of 2017 a record period for the firm. The two businesses entered the rankings at the expense of Fidelity and Liontrust.
Ms Pridham added: "The outlook for fund sales for the rest of the year remains good. With interest rates remaining so low, investors appear increasingly prepared to take the extra risk of putting their money into funds to gain better returns.”