As a comparison, July 2015 saw £3.7bn in inflows. While UK funds saw the largest outflows they were closely followed by European equity funds at -£922m and property funds at £-792m.
Global equity funds bucked the trend with an inflow of £172m, but all regions saw outflows in July.
Guy Sears, interim chief executive of the Investment Association, pointed out that funds under management of UK authorised funds increased by £40bn in July to reach a record high of £989bn - a 4% month-on-month increase.
"Although global equity markets initially fell following the EU referendum announcement, they recovered through July to produce positive returns. Bonds rallied and yields fell to record lows as investors sought safe assets and the market expected a rate cut from the Bank of England," said Sears.
"Net retail sales were negative again in July with an outflow of £1 billion (0.11% of total assets). However, this was markedly lower than the outflow experienced in June. UK retail investors remained cautious as they sold out of equity and property funds, favouring fixed income, mixed-asset and absolute return strategies," he continued.
At the same time retail investors poured £464m into Targeted Absolute Return funds and fixed income fund sectors. “Was all this panic justified? Despite this wave of selling of risk assets markets have proven remarkably resilient, recovering rapidly from the initial knee jerk reaction to the vote,” said Jason Hollands at Tilney Best Invest. “UK equities are now well ahead of their pre-referendum levels and supported by yet another sugar rush from the Bank of England’s decision to cut rates and launch a further volley of QE in August,” added Hollands.
But while fears of a Brexit-induced meltdown have abated, there are however other reasons to be cautious, in Hollands view.
"Concerns around the scale of China’s credit bubble have not gone away, markets want greater clarity on the direction of US monetary policy and US elections will increasingly coming into focus when the televised debates begin in late September," he said. "But above all, asset prices look pretty expensive at a time when the outlook for global growth is far from bullish."