The latest statistics from the Investment Association (IA), the trade body for the fund industry, show that £379 million was invested last month. In January and February fund sales slumped, with more money withdrawn than invested.
Despite being back in positive territory, however, the sales figures have fallen sharply year-on-year. Last March £965 million was poured into funds.
Investors reduced their holdings in equity funds, instead preferring funds with lower-risk characteristics.
The top-selling sector, as shown in the table below, were targeted absolute return funds, attracting £485 million. In second place was UK equity income, followed by short-term money market funds.
The worst-selling sector in March 2016 was the UK all companies sector. Investors withdrew £682 million.
Best-selling fund sectors in March 2016
Investment Association sector
Net retail sales
Targeted absolute return
UK equity income
Short-term money market
Mixed investment 40-85% shares
Investors remain cautious
Guy Sears, interim chief executive of the IA, says: "Retail sales turned positive in March as investors sought to make the most of their pension contribution and Isa allowances ahead of the end of the tax year.
"Retail investors remained cautious, looking instead to multi-asset, absolute return and fixed income products.
"It is a sign of the times, with changing pension regulation and uncertainty in the global economic outlook, that multi-asset and absolute return products have been popular with retail investors.'
The decline in fund sales has been put down to investors becoming unsettled by stock market volatility. This time last year the FTSE 100 was trading above 7000 points, but today it sits just above 6200, an 11% decline.
Concerns over the potential upheaval a 'Brexit' will have on the stock market are another factor behind investors keeping their powder dry.
Adrian Lowcock, head of investing at Axa Wealth, says: "Brexit is in everyone's minds and certainly plays a big part in why fund sales continue to remain really subdued.
"One thing stock markets hate is uncertainty, which is why investors are choosing to sit on the sidelines ahead of the outcome of the vote in June.
"There are other factors at play, however. There were concerns ahead of the Budget in March that there would be some meddling with pensions. Ahead of the Budget this led some savers to make use of their pension allowances, rather than invest in Isas."
This article was written for our sister website Moneyobserver.