Investors put a record £63bn into funds in 2017, taking the total amount invested within the funds industry to £1.2trn, also a record level, according to latest Investment Association data.

Fixed income was the best-selling asset class with net retail sales of £14.3bn. Over £1bn was invested in ethical funds for the first time.

Tracker funds now make up 13.5% of all funds under management. UK equity funds continue to see outflows.

Fund investors made on average 10% in 2017, according to the data.

Hargreaves Lansdown senior analyst Laith Khalaf: “2017 was a bumper year for investment industry sales, as an unprecedented wall of money made its way into mutual funds. Rising markets, an improving global economy and low interest rates no doubt all contributed to the record level of investment.

“With a 10% typical growth rate across the year, fund buyers were well rewarded for their investment, and showed a clean set of heels to cash savers, as deposit rates are still delivering a paltry rate of return thanks to loose monetary policy.

“If you knew in advance that 2017 would feature rising inflation and the first UK interest rate hike in ten years, you wouldn’t have predicted a great deal of investment in bond funds, nonetheless these vehicles were the surprise winners when it came to attracting money last year. “The precise reasons for this phenomenon still remain elusive. Some cash savers may have moved up the risk spectrum in search of a better rate of return, other investors may have sought diversification from strongly rising equity markets. Others yet may simply have been expressing a negative view on the UK economy.”

Khalaf said ESG is “definitely rising in importance within fund groups and is becoming more embedded in traditional asset management, so sales of pure ethical funds are only one visible part of an evolving trend that has further to run.”

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