The publication of Morningstar's asset flows data showed record net inflows for the year, which took European-domiciled open-end funds to £7.86 trillion (€8.9 trillion) under management, up from £7.04 trillion (€7.96 trillion) in 2016.
European managers saw net inflows of £604.24 billion (€682.8 billion) for the year, with fixed income products raking in a record £254.86 billion (€288 billion), according to data from Morningstar Direct to the end of December.
Inflows to allocation funds amounted to £119billion (€134.6 billion), close to the record levels of £120.3billion (€136.0 billion) seen in 2014.
Long-term passive funds ran at higher growth rates than actively managed funds again. The combined inflows to open-end index funds and exchange-traded funds reached £143.7 billion (€162.4 billion), at an organic growth rate of 14.7%.
BlackRock topped the list of European asset-gatherers in 2017 following inflows to both active and passive funds totalling £55.48 billion (€62.7 billion). Index funds - excluding ETFs - pulled in £33.45 billion (€37.8 billion) of this, while most of the net new money on the active side flowed to BlackRock's fixed-income products.
Heading the list of outflows was Standard Life, which suffered overall outflows of £6.37 billion (€7.2 billion).
Ali Masarwah, director, EMEA Editorial Research at Morningstar, said: "As markets gave investors a smooth ride with no bouts of volatility rocking the boat, investors flocked to the fund market in 2017 highs. Both active and passive strategies saw record inflows throughout the year as a result, although we continued to see the trend of passive products increasing their market share.
"It was a record year for bond funds. However, it remains to be seen if this trend will continue following a bond market sell off in the first month of 2018, and further structural changes to come through the tapering of the European Central Bank's bond-buying program."
The Investment Association also released figures today which echoed the findings.
The Investment Association’s monthly statistics of UK investor behaviour in December 2017 show:
· 2017 was a record breaking year with net sales into UK authorised funds reaching £63 billion
· Funds under management ended the year at an unprecedented £1.2 trillion
· Fixed Income had its best-selling year and was the best-selling asset class in 2017, with a total of £14.3 billion in net retail sales.
Chris Cummings, chief executive of the Investment Association, said: “The high monthly net retail sales seen throughout 2017 continued in December as UK retail investors allocated £3.7 billion of new money into our industry."