In what was described as an “extraordinary and challenging geopolitical year”, net fund sales reached just £4.7bn, down from £16.8bn in 2015, according to figures from the Investment Association.

Equity funds were hit particularly hard, with net outflows of £8.2bn in 2016, compared to being the top-selling asset class a year earlier with net retail sales of £7.8bn.

The Targeted Absolute Return sector was the best-seller, attracting net sales of £5.1bn, while fixed income was the second best-selling asset class, drawing in £3.8bn. This followed outflows of £2.1bn in 2015.

Ryan Hughes, head of fund selection at broker AJ Bell, said: “Investors moved to take risk out of their portfolios and piled into sectors that offer protection from falling share prices.  Unfortunately, this nervousness proved unfounded as both the UK and US markets have hit record highs since then, showing how important it is to take a long-term approach to stock market investing.”

UK and European equities were particularly out of favour as investors turned to global equity funds for more diverse exposure to stock markets.

Property funds were also hit hard leading to the well-documented suspensions of many of them.

Chris Cummings, chief executive of the Investment Association, said: “Despite a slowdown in net retail sales in what was an extraordinary and challenging geo-political year, the UK asset management industry continued to grow strongly and provide value to investors, savers and pensioners across the world.

“Funds run by our members for UK investors grew by more than £100 billion in 2016, representing a significant contribution to people’s wealth and pensions, as well as the UK economy as a whole.”