Investors withdrew more than £1bn from UK equity funds in May, according to the latest Investment Association statistics, as the total amount of cash pulled from the asset class since June 2016 soars towards £10bn.
In its monthly statistics for May, the IA revealed UK equities saw outflows of £1.2bn, far higher than average monthly outflows of £382m.
The majority of this came out of UK All Companies funds, which saw outflows of £996m and was the worst-selling sector. UK Equity Income funds saw outflows of £298m.
This was a disappointment for the UK Equity Income sector after it returned to positive inflows for the first time in ten months in April.
Calculations from AJ Bell added outflows from UK funds have now reached £9.1bn since the Brexit vote two years ago.
Demonstrating a more cautious stance, investors were buying into absolute return, strategic bonds and money market funds as volatility returned to markets, Brexit uncertainties climbed and investor fear the end of the nine-year bull market.
Funds classified as Other, which includes Targeted Absolute Return, Volatility Managed, Protected and Unclassified sectors, were the best-selling asset class with £667m in net retail sales.
Furthermore, Targeted Absolute Return was the May's best-selling sector with sales of £516m. This was a significant jump from 35th place last month to first place.
Money Market funds also saw inflows of £62m.
In fixed income, £361m was invested in bonds funds, particularly those in the £ Strategic sector, which was the fifth best-selling sector with net retail sales of £168m, and Global Bond sector. This was a positive development as fixed income funds had seen outflows over the previous three months.
However, not all bond funds were popular in May with £ Corporate Bonds and £ High Yield both reporting significant outflows of £68m and £121m respectively.
Total net retail sales were £1.9bn, compared to £3.8bn a year ago, while total assets under management were £1.2trn.
Chris Cummings, chief executive of the IA, said: "In the context of ongoing Brexit uncertainty, outflows from UK equity funds reached £1.2bn in May.
"As the clock ticks towards the UK leaving the EU, we need to see a gear change ahead of the next European Council Summit in October and significant progress being made towards a deal that will protect the wider European economy."
Alastair Wainwright, fund market specialist at the IA, said: "UK equities have been unpopular with UK investors since the beginning of January 2016, however outflows increased following the Brexit referendum result. However, UK equities are not necessarily reflective of the UK economy, given the high number of firms with international revenue bases listed in London.
"May also saw the resurfacing of Targeted Absolute Return as the best-selling sector. This signals caution amongst investors as they look to insulate themselves from market movements in the traditional equity and fixed income markets."
Laura Suter, personal finance analyst at AJ Bell, said: "Investors pulled another £1.2bn of money from UK-focused funds in May, taking the total net withdrawals since the Brexit vote to more than £9.1bn.
"A clear sign of investor nerves around Brexit and a sluggish UK economy is shown in the fact that the outflows from UK All Companies sector were higher than the aftermath of Brexit, with almost £1bn of investor money withdrawn from these funds in May. The UK Equity Income sector was also hit with redemptions, as almost £300m was withdrawn in the month alone.
"Investors are increasingly wary of stockmarket investments, with the amount invested in equities in all countries falling dramatically between April and May, from £1.6bn to £263m.
"The areas still in favour with investors remain global funds, Japan funds and North American equity funds.
"Showing further signs of nervousness, investors went back into the bond markets in a big way in May, with £361m committed to bond funds. Within this group, strategic bond funds returned to favour, after withdrawals in March and muted inflows in April, seeing £168m invested during May.
"Targeted Absolute Return funds were the best-selling sector for the month, with £515.6m of net inflows - and marking the first time in more than a year that the sector has been the best seller."
UK recovery mandate marking 10 years
Concerns rally is overextended
Female millennials invested 40% more year-to-date
Will compare with May 2017 results
Jane Ambachtsheer joins as global head of sustainability