The best selling fund sector on the Fundsnetwork platform in December was the Short Term Money Market, essentially investments into cash, indicating investors were determined to avoid risk assets.
The most popular equity market sector was the IA Global, which came second in the sector league table.
Third and fourth were sectors containing funds that mix equity market exposure with other assets, the Volatility Managed and Mixed Investment sectors.
The Fidelity Cash fund, which is operated by Fundsnetwork’s parent company, was the best selling fund on the platform, while the Legal and General Multi Index fund and the Royal London Cash Plus fund filled the next two spots.
Paul Richards, head of fund sales at Fundsnetwork said: "The market in December faced some significant challenges in the form of high levels of volatility, ongoing Brexit uncertainty and questions around whether the bull market in the US is finally coming to an end.
"Against such a backdrop, it is unsurprising to see advisers take risk off the table and allocate towards more defensive assets.
"The strong flows into cash funds are an indication that advisers and their clients are looking for short term strategies to mitigate risk of loss and manage volatility. We expect defensive and diversified assets to predominate throughout 2019."
Only three actively managed equity funds made the top ten of fund sales on the platform in December.
Those were the £16bn Fundsmith Equity fund, the Franklin UK Equity Income fund, and the Baillie Gifford Japan fund.
Advisers dealing with pension mandates on behalf of clients were more likely to buy actively managed funds than advisers dealing with Isa mandates, with six of the ten pension bestsellers falling in the active category compared with three for Isas.
Alec Cutler, portfolio manager at Orbis Investments, said he began buying defensive shares in 2018, and won’t be changing, even if the market has performed slightly better in 2019.
He said: "When markets are scary, investors don’t buy contrarian names—they buy things that make them feel comfortable in the moment, regardless of the relationship between price and intrinsic value.
"This leaves us frustrated about performance, but no less enthusiastic about the prospects for the opportunities we like."
James Foster, who runs the £1.4bn Artemis Strategic Bond fund, said: "Markets are pricing-in a recession. That seems wrong. President Trump will start to focus on addressing the trade issues with China, which will boost stockmarkets – his yardstick for economic performance.
"And Brexit is likely to reach a parliamentary agreement, though the form of this is still impossible to fathom. So while negativity is high at the moment, it won’t be too long before we start to see some light at the end of the tunnel."
David Scott, an adviser at Andrews Gwynne in Leeds, said the problems in markets right now were due to a lack of liquidity.
He said central banks had, in the decade since the financial crisis, been buying risk assets via quantitative easing, and it was the unwinding of this policy that had caused the value of risk assets to fall.