A total of £624m was pulled from fixed income portfolios as investors reacted to the future tapering back of quantitative easing (QE) by the US Federal Reserve.

Global bonds suffered their fourth-worst month in 20 years in May after chairman Ben Bernanke said the central bank may slow the rate of its bond purchases if the unemployment rate and the economy continue to improve.

Jason Hollands, managing director of Bestinvest said: “QE has severely distorted prices in large parts of the fixed income market, to the point where many bonds look expensive and offer yields that simply aren’t attractive once inflation is factored in.

“In particular, developed market government bonds, index linked bonds and investment grade corporate bonds look vulnerable as and when the markets finally decide that QE will come to an end. Investors are therefore right to wake up to the fact that so-called “low risk” bonds will generate capital losses at some point.”

Equity remained the best-selling asset class with net retail sales of £884m. UK equity funds were the best-sellers in June with net retail sales of £479m – the highest since October 2006.

Despite the exodus from fixed income funds, total sales remained positive at £1.1bn.