Consumers turn to investment funds
New figures have shown that consumers paid a near-record amount into investment funds last year as they sought out new places to keep their cash in response to low interest rates.
According to the Investment Management Association, the amount invested in UK-based unit trusts and open-ended investment companies (OEICs) was £23.9 billion in 2010.
The figure does not take into account those cashing in their investment or moving it elsewhere, as they were stripped out.
The group said last year's figure fell just short of the record seen in 2009, when £25.9 billion was invested into funds.
Sales of tax-free ISAs were strong, with net investments of £3.9 billion - the highest level seen since 2001.
Richard Saunders, chief executive at the Investment Management Association, said: "Consumers continued to increase their investments at record rates in 2010, which was the second highest year on record for fund sales. And ISA sales were the strongest in nearly a decade."
There was a marked shift in people's preference for equities during the year, with net sales of stocks and shares funds reaching £7.5 billion, a level last seen in 2000, shortly after the FTSE 100 reached its highest ever level.
Bonds also remained popular, with people increasing their investments in them by £7 billion during the year.
The combination of the strong inflows of cash and good investment returns, meant the level of funds under management had reached a record £577.6 billion by the end of 2010, including money held for institutional investors, such as pension schemes.
Copyright © Press Association 2011