UK retail investors have rekindled their love affair with US equity funds and spectacularly sold out of short-term money market funds, according to data from the Investment Association (IA).
Having piled a record £2.1bn of money into the IA Short Term Money Market sector in March, IA data in April showed the sector saw some £856m of net outflows, making it the least popular peer group in the month.
Conversely, having seen net outflows of £179m in March, the IA North America sector returned to the top of the charts in April, with inflows surging to £932m, the sector’s strongest monthly inflow since April 2025.
Overall, total net sales for April hit £1.5bn, a marginal increase on the £1.3bn registered in April and the sixth consecutive month of inflows.
According to the IA, money market funds in general recorded their first monthly outflow since August last year, which it said suggests some of the capital could be driving a shift back into equities, despite continued uncertainty in the broader economic outlook.
Indeed, equity outflows narrowed sharply month-on-month, from £1.3bn in March down to £669m in April.
“For much of the past year, investors have been holding capital in short-term cash-like assets, understandably so, given the level of uncertainty in markets,” said Miranda Seath, director, market insight & fund sectors at the IA.
“The fact that we are now seeing that money begin to move is an encouraging sign that investors are starting to feel more confident in the investment outlook, particularly for the US following a strong month of North American equity inflows.”
For Seath, the question now is whether this momentum into US equities broadens out, or whether geopolitical uncertainty keeps risk appetite contained.
See also: Calastone: Investors drop equities as bond funds experience best month in three years
