Figures released by the Investment Association, which represents the UK fund management industry, show net retail sales were £1.7bn, reversing outflows in June and July when investors pulled £3.5bn and £1bn from funds respectively.

However, investors remained cautious, favouring less risky strategies. Fixed income funds proved the most popular during the month attracting £1.2bn, while targeted absolute return funds, mixed asset funds and money market funds also attracted money.

Riskier equity funds witnessed outflows of £629m, despite equity markets rallying since the initial fallout of the referendum result. The largest equity outflows were seen in European equities (-£297m) and UK equities (-£162m).

Alastair Wainwright, fund market specialist at the Investment Association, said: “Although markets have rallied due to looser monetary policy from the Bank of England and the weaker pound, UK investors remain cautious in their asset allocation decisions. The widely anticipated decision by the Bank of England to cut the bank rate to 0.25% enticed investors to fixed income funds which benefited from lower bond yields.”

Jason Hollands, managing director at Tilney Bestinvest, said: “With share price valuations looking quite rich across most developed markets, caution by investors is understandable but with bond yields at very low levels, indeed negative in some cases, traditionally defensive asset classes are also unappealing and may not prove quite the safe haven many assume.

“The gush of liquidity provided by central banks in recent years has led to a very high degree of correlation in equities and bonds and this could in turn also lead to a synchronised sell-off at some future point.”