UK investors removed a net £136m from funds in May, with UK equities losing a record £1.8bn, according to data from the Investment Association.
The outflow follows months of inflows in March and April as investors added to ISAs before the end of the tax year. Despite the overall loss, index trackers continued to grow with equity trackers ballooning £1.2bn and bond trackers growing £815m.
Losses in UK equities follow the trend of the past two years, with the sector experiencing a £13.6bn drop in 2023 and a £12bn drop in 2022. UK gilts, however, stayed in the green for May, drawing in £354m. Fixed income in general dropped £318m.
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Miranda Seath, director of market insight and fund sectors at the Investment Association, said: “Despite net retail sales returning to negative territory in May, monthly outflows of £136m represent a relatively modest dip compared to what we have seen over the past 12 months.
“While flows have turned negative, this follows a boost of £1.3bn in inflows in April, driven by UK ISA season, and overall, they remain substantially above the average £2.1bn monthly outflow for the preceding 12 months.”
By region, global funds, Europe, and North America attracted investors, receiving £553m, £249m, and £189m, respectively. Investors removed money from both Asia and Japan funds, but at rates of £170m and £210m compared to the UK’s £1.8bn.
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“Our May data could be a sign that investor confidence is stabilising. While geopolitical uncertainty remains, much is set to be decided at the ballot box over the coming months, and investors will get used to a new political landscape,” Seath said.
“Looking forward, there are reasons to be positive as we expect interest cuts in the UK and potentially in the US later this year as inflation continues to fall. As outlook potentially improves, we will be keeping a close eye on how investors respond.”
