Fund outflow totalled £2.9bn in Q1 2025, the worst quarter since the £8.6bn outflow recorded in Q4 2023, the Investment Association’s (IA) latest retail statistics release has shown.

This was despite funds returning to inflow in March, with investors placing £507m into funds during the month.

The IA noted that March’s ‘modest’ inflows were driven by investors making use of allowances before the end of the tax year, following two consecutive months of outflows during a “tricky” investment period.

It added that the first quarter of 2025 had been shaped by concerns over the Trump administration’s tariffs, rising inflation, and an uncertain interest rate outlook.

Q1 saw net retail outflows from equity funds of £3.9bn, following a £3.4bn outflow in the fourth quarter of 2024.

However, North American equities continued to see inflows, with net retail sales of £1.4bn in Q1.

UK equities experienced their worst quarter on record with outflows of £4.2bn, according to the IA’s data.

Bond funds had net retail outflows of £957m in Q1 after outflows of £1.3bn in March, following a positive second half of 2024.

Mixed asset funds saw inflows of £634m, the first quarterly inflow since Q1 2023, while responsible investment funds experienced record quarterly outflows of £1.8bn.

Index tracking funds had inflows of £5.2bn, which followed a record £28bn of inflows into index trackers in 2024 as a whole, while actively managed funds saw outflows of £8.1bn over Q1.

“Q1 was no easy ride for investors and outflows suggest that we’ve seen a drop in confidence following the more positive end to 2024,” stated IA director, market insight & fund sectors, Miranda Seath.

“Whilst markets were initially buoyed by Trump’s victory in the US, volatile policymaking and uncertainty around the future of global trade make it challenging for investors to make clear cut decisions. This is reflected in the notably strong inflows into money market funds in March, as investors take a ‘wait and see’ approach.

“This uncertainty shows no sign of abating as investors await the full impact of the fallout from Trump’s global tariffs. Recognising the key headwinds and tailwinds for global markets, many investors will carefully assess their next move.

“Until we see more stable and consistent policy, we are likely to see further market volatility. It is important that investors maintain a long-term perspective and carefully consider any investment decisions.

“Diversification across asset classes and geographies can also help manage risk and market downturns. While the uncertainty is set to continue in the near-term, over the long-term staying invested may be the best strategy."

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