The £1.1bn invested during the 12-month period is half the £2.2bn of the previous tax year, while the first quarter of 2013 saw net outflows of £142m.
Those that did invest poured most of their ISA money into defensive sectors, according to data from the IMA, with bonds, mixed asset and equity income dominating the net sales charts.
Net ISA sales through funds
| Tax Year | Full Tax Year | Q1 2013 | Q4 2012 | Q3 2012 | Q2 2012 |
| 2012/13 | £1,126m | -£142m | £-90m | £-192m | £1,479m |
Source: IMA
The figures suggest that retail investors remain cautious with their money, despite the excellent year for the stock market.
The most popular sector for ISA investors this year was IMA Sterling Strategic Bond, which saw net inflows of £387m.
However, this was lower than the £433m it took a year earlier, when it was only the second most popular sector.
Our data suggests the lion’s share of those inflows may have gone to FE Alpha Manager Richard Woolnough’s M&G Optimal Income fund, which has taken in £4.1bn of investors’ money over the last year in total.
Woolnough’s fund has now reached almost £14bn in size, although its performance has been patchy of late.
The fund was third quartile in 2010 and 2012, but top quartile in 2011, and overall it is still in the top 25 per cent of funds in the sector over three years, with returns of 28.93 per cent.
Performance of fund vs sector over 3yrs
Source: FE Analytics
IMA Mixed Investment 20%-60% Shares was the second most popular sector, trading places with IMA Strategic Bond.
It saw net inflows of £361m, down from £504m in 2011/2012.
Our data shows that Jupiter Merlin Income has dominated sales from the sector over the past 12 months, although it is not possible to isolate sales through ISAs.
The £4.7bn fund, which has five FE Crowns, sits in the top quartile over one, three, five and 10 years, explaining its popularity.
Over the past three years it has returned 27.2 per cent while the sector has made 18.09 per cent.
Performance of fund vs sector over 3yrs
Source: FE Analytics
Global Equity Income soared into third spot in the popularity stakes from 12th a year earlier, and the £3.7bn Newton Global Higher Income fund is likely to have taken a large slice of that money.
The popularity of the IMA Global Emerging Markets and IMA Asia Pacific ex Japan sectors has held up.
Net ISA sales by sector in 2012/2013
| Sector | Net ISA sales through funds |
Net ISA sales through funds |
||
|---|---|---|---|---|
| 1 April 2012 to 31 March 2013 |
1 April 2011 to 31 March 2012 |
|||
| Rank | Sales | Rank | Sales | |
| Strategic Bond | 1 | £387 million | 2 | £433 million |
| Mixed Investment 20-60% Shares | 2 | £361 million | 1 | £504 million |
| Global Equity Income | 3 | £224 million | 12 | £57 million |
| Global Emerging Markets | 4 | £202 million | 4 | £200 million |
| Asia Pacific Excluding Japan | 5 | £174 million | 6 | £132 million |
Source: IMA
In March of this year, defensive sectors continued to dominate, with IMA Absolute Return seeing inflows of £334m.
Standard Life GARS has seen inflows worth £4.1bn over the last calendar year, more than three times as much as Newton Real Return, and is likely to have seen the bulk of the March inflows.
The IMA Mixed Investment 20%-60% Shares and IMA Global Bonds sectors were the next most popular.
The industry saw a late surge of inflows in early April, with £347m invested in the first five days of the month as people scrambled to use up their allowance.
Daniel Godfrey, IMA chief executive, warned investors that this is not the best way to use ISAs.
"This is a common trend, but investors should be reminded that they can invest in ISAs on a regular monthly basis," he said.
"This not only reduces the financial burden of finding a lump sum but also reduces risk as you buy more units if prices fall, which then achieve higher proportionate gains when prices recover."
In March, FE Trustnet looked at five funds most suitable for a monthly savings plan.