UK-based investors removed a total of £1.5bn from equity funds in May, building on April’s £676m outflows, according to recent data released by the investment association (IA).
Redemptions were generally broad across the asset class, with Europe and the UK experiencing large outflows (more than £400m and £300m respectively). Global emerging market funds were similarly down, with outflows of about £429m for the month, according to the data.
That said, equity funds did have some bright spots, with IA technology and Technology innovation funds up by £365m, the second month of positive flows for the sector. Before March 2026, money had been pulled from the sector in six consecutive months.
However, despite this poor performance from equities, net retail sales for funds reached £2.5bn in May, the highest in the past year and the seventh consecutive month of inflows from the asset class.
According to the IA, gross money coming into investments fell to the lowest level since January. However, the amount UK investors were redeeming also fell, allowing net inflows to remain high despite slowing activity.
Miranda Seath, director of market insights and fund sectors at the IA, said: “Despite a complex global backdrop and market uncertainty, UK investors continued to remain invested.
“While people were slightly less active overall after the ISA season, the data suggests they are not turning away from investing.”
See also: IA: Money market fund outflows surge in April
Instead, they were making more considered choices about where to put their money, according to Seath.
Indeed, according to a recent poll of retail investors conducted by the IA, among the 53% of investors who made changes to their portfolio, the highest proportion of respondents (17%) increased their investments.
Seath continued: “Periods of geopolitical and economic uncertainty can understandably make investors cautious, but recent market reactions have been relatively short-lived compared with the volatility seen in 2022.
“For investors, the key message remains that markets do recover, and staying invested through uncertainty is key.”
Fixed income funds in particular had a good month, with inflows surging to £1.47bn, up from just £465m in April. Mixed bond funds were the top-selling sector of the month at £626m, while volatility managed strategies took home £443m.
Just one bond sector (The Unclassified sector) lost money in May, according to the data.
Similarly, mixed asset funds had a strong run and attracted a further £1.7bn, the seventh consecutive month of net inflows.
Seath added: “Strong demand for fixed income, mixed bond and volatility managed funds shows that many are looking for a balance of diversification, income and stability.”
See also: Finscape: Active funds trounce passives in May as geopolitics bubbled
