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Money flows into investment funds

 The amount of money consumers paid into investment funds reached a six-month high during October as the sector continued to benefit from low interest rates, figures show.

Investors paid a total of £8.65 billion into unit trusts and OEICs (open-ended investment companies) during the month, the highest level since April, which is often boosted by the start of the new tax year.

Net sales, which strip out people cashing in their investment or moving it elsewhere, reached £2.04 billion during October - the ninth time during the past 12 months that it has been at or above £2 billion, according to the Investment Management Association (IMA).

People have now made around £20 billion of new investments into the funds since the start of the year, only slightly below the record level of £21.3 billion seen during the same period last year.

Investment funds have grown in popularity since the Bank of England base rate was slashed to a record low of 0.5% as people look for alternatives to savings accounts in a bid to get a better return on their cash.

But net ISA sales slumped to £44.6 million during October, less than half September's level of £97.9 million.

Despite the subdued figure, which was the lowest since February last year, new investments into ISAs during the year to date are running at £3.7 billion - the highest level since 2001.

Copyright © Press Association 2010

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