Net retail sales were £484m in January, a third consecutive month of positive flows, with equity index trackers covering global and North American sectors attracting strong inflows, according to Investment Association (IA) data.
Overall, however, equity flows were in negative territory with £2bn exiting the asset class in January, an increase on December’s £206m outflows. The IA said redemptions here were broad-based, but outflows were largely from active equity mandates suggesting “a tempered return to low-cost equity exposure.”
The IA said: “Despite the potential for the AI bubble to burst, mega-cap tech firms helped to drive positive US returns through 2025. January data suggests that investors haven’t turned away from low-cost exposure to the US but actively managed funds continue to suffer. Active equity funds saw substantial outflows over the second half of 2025 with a monthly average of -£3.1bn. January’s re-acceleration brings outflows back into line with this average after a relatively modest £1.4bn outflow in December.”
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Tracker funds overall saw £1.3bn inflows, with equity tracker inflows concentrated, as mentioned to global and Northern American funds – these sectors recorded £479m and £461m respectively.
Meanwhile, active funds recorded outflows of £843m after two months of inflows in November and December. Global funds saw £848m seek the exit, while £548m left North American strategies.
In terms of fixed income, the IA said £491m moved into bond and credit funds, a small increase from the £406m recorded in December. The IA added inflows were driven by Corporate Bond (£353m) and UK Gilts (£142m), marking a third consecutive month of UK gilt inflows. GEM Bond – Local Currency funds also returned to inflows, with £159m, while Government Bonds remained in outflow mode with £19m redemptions.
Money Market funds saw £712m of inflows, reflecting “defensive positioning”, and Mixed Asset funds received £630m in inflows – a third consecutive positive month.
“The tactical, risk-off positioning that brought higher sales to money market and mixed asset funds to in 2025 has continued into the new year,” the IA said. “At the beginning of 2026, heightened tensions between the US and Europe over Greenland, and the capture of Venezuelan President Nicolás Maduro brought tariff and military concerns to the fore but the impact on markets was muted.
“In this environment, investors remain cautious overall as net retail inflows slowed and investors showed preference for money market, mixed asset and fixed income funds.”
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Meanwhile, responsible investment funds saw outflows ease – for January outflows were £271m, compared to £404m in December.
Miranda Seath, director, market insight & fund sectors at the IA, said: “Inflows of £484m in January is a positive result in an environment of persistent geopolitical uncertainty. Investors have moved back to allocating to US and global equities but have chosen exposure through low-cost index funds. This follows solid US market performance in 2025. But as high active equity outflows show, investors are still managing their exposure to risk assets – flows to fixed income and money market funds (£712m) confirm that many investors remain wary of market volatility.
“Looking ahead, and particularly as we wait to see the impact of the Iran conflict on the cost of energy and consequently price inflation, it is important to remember that investing remains critical to delivering growth compared with cash, where inflation could erode savings longer term.
“With the chancellor signalling policy stability with a measured Spring Statement and ISA season approaching on 6 April, the coming months will show whether confidence in markets could continue to rebuild. However, elevated geopolitical risks may serve as a reminder to investors on how quickly volatility can return to financial markets”
