Consumers invested more than £6bn in November, bolstered by the positive news of successful vaccine trials.
Morningstar data shows some £6.5bn was pumped into UK-based funds during the month, with the majority — £4.6bn — flooding into equity markets.
The research firm put this down to buoyed investor sentiment off the back of positive vaccine announcements.
At the start of November, Pfizer and BioNTech announced their vaccine was 90 per cent effective and that they were pushing for emergency approval. Markets jumped skywards on the news.
Just a week later, Moderna revealed its vaccine was nearly 95 per cent effective, boosting global indices further still.
Business thwarted by the global pandemic — such as International Consolidated Airlines (BA’s parent company), Rolls Royce and energy firms like Shell and BP in the UK — drove the upward trend.
The most popular Morningstar category throughout the month was US large-cap equities, with nearly £2bn of net flows. This follows a successful year for the sector as tech stocks, dominant in the US market, have thrived amid the pandemic.
Investors also began to back previously unloved markets, however, with £724m placed into European equity funds. Other popular categories included adventurous allocation and flex-cap equity.
The least-loved group was UK large-cap equity, which has suffered this year as Brexit, the UK’s struggles with the virus and the dividend drought saw the UK market lag its global counterparts in the aftermath of the March crashes. Investors pulled some £1.1bn from the category.
During November, investors also pumped £107m into fixed income funds while allocation and multi-asset portfolios, particularly popular with advisers, saw £2.8bn of inflows.
Meanwhile, a sustained drop in the price of gold saw investor sentiment sour. Investors pulled £235m and £101m respectively from the two largest gold funds, BlackRock G&G and Ruffer Gold.
Property funds also saw net outflows of £320m, after months of little movement due to gated portfolios.
Aberdeen Standard Investments is the latest fund manager to remove the suspension from its two property portfolios and, according to Morningstar, saw a combined £227m pulled from the funds in November.
Most of the largest 10 fund groups saw net inflows in November, with only M&G and Schroders being exceptions.
Baillie Gifford was the most popular asset manager throughout the month, seeing £726m invested in its funds, while investors backed Vanguard and Royal London to the tune of £483m and £453m respectively.
Bhavik Parekh, associate analyst at Morningstar, said: “November was a strong month for value investors, so some may not have expected the £726m net inflow into Baillie Gifford, a growth-orientated house.
“There were significant net redemptions from its two largest global equity offerings, but strong flows into Baillie Gifford Pacific, Baillie Gifford Managed, and Baillie Gifford Positive Change propelled it to another strong month.
“With the exception of March, the fund group has seen net inflows every month in 2020.”