UK equity funds have lost £601m in investor capital throughout August, marking the largest proportion of equity outflows during the month.
On a net basis, equity funds overall saw £315m of outflows. While UK mandates suffered the largest pullback in investor sentiment, European equity funds came in second place with net outflows of £145m. Specialist funds suffered withdrawals of £52m, while North American funds lost £3m in investor capital. This marked the first withdrawal for US equity funds since 2025.
In contrast, appetite for fixed income funds remained positive, with the asset class attracting a net £407m in flows. This marks the fourth consecutive month of positive flows for bond funds, remaining largely in-line with the asset class’s 12-month average.
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Money market funds also fared well, doubling their 12-month average of inflows at £364m. This also marks the asset class’s largest monthly inflow since November last year.
Edward Glyn, head of global markets at Calastone, said: “Such prolonged outflows from equity funds are incredibly rare. There is a huge built-in bias towards fund inflows as UK households add to their savings over time – and equity funds have traditionally been big beneficiaries.
“Investors aren’t panicking, but they are stubbornly refusing to chase equity markets higher. August’s outflow was much smaller than July’s, but the pattern is now well entrenched. With markets near record highs, investors may have reservations about where equities go from here.”
He added that “continuous budget speculation” is adding to this caution, given that some investors may be fearing an end to capital gains and pensions tax breaks.
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“Cash is also doing more of the talking,” Glyn added. “Money market funds have had their strongest month since November, while bond inflows continue to attract healthy sums.
“When investors can earn a decent return without taking equity risk, there is much less pressure to chase the market. They can afford to sit on the sidelines and wait for a better reason to buy.”
