Equity funds saw their highest net retail sales for nearly two years in February, the Investment Management Association (IMA) said today, with net inflows of nearly £1bn.

In a sign that some rotation out of bond funds is beginning to take place, the IMA’s latest statistics reveal equity funds saw net sales of £940m in February, the highest level since April 2011.

Fixed income funds also saw their highest net outflows for several years, with net retail redemptions of £163m, the highest level since July 2008.

Daniel Godfrey, IMA chief executive, said: “Retail investors were putting more into equity funds than at any time for nearly two years and this was broadly spread with UK, European, Asian and Global equity funds all seeing significant net investment.

“For a second month retail investors reduced their fixed income holdings.”

Overall assets under management across all the IMA sectors climbed above £700bn for the first time on record, hitting £706bn, as positive equity market sentiment helped lift valuations.

Total AUM for the UK’s funds industry is up 14% year on year. Assets were given a boost by the latest inflows in February, with overall net retail sales of £1.3bn on the month, up from £1.2bn last February.