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Vishal Teckchandani is a journalist with InvestorDaily, a Morningstar publication.

Listed managed investments (LMI) lost $17 billion in the past year, according to a report by the Australian Securities Exchange (ASX).

Funds under management (FUM) for the LMI market - which includes investment structures such as Australian real estate investment trusts (AREIT), listed investment companies (LIC) and exchange-traded funds (ETF) - dropped 12.3 per cent to $120 billion in the 12 months to September.

AREITs, LICs and listed infrastructure funds saw losses of billions of dollars in FUM, while ETFs and exchange-traded commodities (ETC) added money.

AREIT FUM declined nearly 10 per cent to $70 billion in the 12 months, and LIC assets tumbled 21 per cent to $15 billion.

Listed infrastructure funds shed $6 billion to $30 billion.

ETF assets rose 5 per cent to $4.1 billion, while ETC assets increased 20 per cent to $805 million.

AMP Capital Investors chief economist and head of investment strategy Shane Oliver said the main factor for the decline of FUM within LMIs was the poor performance of markets.

"Many markets have had 20 per cent-odd falls and as always when the problem is global and big all assets tend to get dragged down except cash and government bonds in safe countries," he said.

But Lincoln Indicators research manager Dennis Ng said while markets could be blamed to some degree, structures such as AREITs were becoming less popular.

"In the global financial crisis we saw substantial recapitalisation of these entities as they were overly geared, so investors have become wary of this and are also expecting lower returns from AREITs going forward," he said.

He said ETFs were gaining popularity as investors were becoming concerned about active managers' ability to beat the market.

"I think you have a lot of people who are disillusioned with active fund managers, so they are preferring to get broad market exposure via an ETF and cut back on the fees."

ETFs are funds that can be traded like stocks and are generally designed to track indexes like the S&P/ASX 200 or the US S&P 500.