Isas slip out of favour.
Retail investors put pounds 762 million into ISAs in February compared with more than pounds 1 billion in the same month last year.
The 'dash for cash' which accompanies an equity slump resulted in a big increase in ISA redemption which saw net sales fall by more than 35 per cent, according to figures from the Association of Unit Trusts and Investment Funds (AUTIF).
Net sales in January and February combined were 29 per cent down on the first two months of the previous year.
ISAs have been seen as a key indicator of sentiment among small investors since they were introduced in 1999.
Sales hit pounds 4 billion in the first quarter of last year as savers looked to use up their allowances before the end of the tax year.
But sliding markets and fears that a slowdown in the US will lead the global economy into recession have dampened enthusiasm for mutual funds.
Total sales for the first quarter this year are likely to be closer to pounds 3 billion, AUTIF said.
The fall in global equity markets resulted in the value of funds under mutual management falling to pounds 257.3 billion in February. The affect was compounded by a higher rate of redemptions by institutional investors.