Investment Association (IA) fund net outflows totalled £2.3bn in 2025 as defensive positioning dominated investor behaviour, despite a £2bn inflow in December.
Money market funds were the best-selling asset class across the year, recording £6.9bn in inflows. This was the highest annual inflow on record for the sector.
Equity funds particularly suffered with a £16.9bn net outflow over the year. Investors pulled cash from North America and global funds as they sought to diversify their large cap tech exposure. Equity outflows were higher than 2024, but lower than the £22.4bn recorded in 2023.
The first quarter saw £2.3bn in redemptions, followed by £4.7bn inflows in Q2. Monthly inflows peaked at £3.3bn in May, which the IA attributed to ISA season and investors ‘buying the dip’ in the wake of Trump’s ‘Liberation Day’ tariff policy announcements.
See also: Are precious metals losing their shine for investors?
UK equity funds had their strongest year for flows since 2021, though outflows were still strong at £11.1bn. Meanwhile, European equity funds enjoyed £761m net new cash as investors moved their funds away from the US.
Instead, investors defensively positioned with fixed income funds recording a £1.1bn inflow over the year, though this was down from £3.6bn in 2024.
Bond funds saw inflows through the second half of 2025 as investors adopted a more risk off sentiment and diversified away from equities.
Tracker funds attracted £12.8bn inflows, down from a record £27.6bn in 2024. Actively managed funds, meanwhile, saw outflows ease significantly to £15.1bn, compared with £29.9bn in the previous year.
“Through extended periods of geopolitical and market uncertainty, investors were cautious,” said Miranda Seath, director, market insight & fund sectors at the IA.
“In 2025, investors rotated away from US and global equity strategies and into diversified, lower‑risk asset classes, such as money market, mixed asset and mixed bond funds. We end the year on a positive note, seeing £2bn flow in through December across fixed income and mixed asset as equity outflows softened substantially.
“Looking forward, we expect 2026 to see retail fund flows to continue to build back. Demand for diversified, lower risk allocations looks set to continue in a climate of persisting geopolitical uncertainty, evolving monetary policy in the UK and the US and ongoing concerns around high US equity valuations,” she added.
“At the same time, investing is a long-term game. The Leeds Reforms provide a once in a generation framework to bring more UK adults into investing: the stage is set to drive an increase in retail investment across the UK.”
Funds under management across the IA universe closed 2025 at £1.62trn, an increase from £1.49trn at the end of 2024.
