Net retail outflows totalled £2.3bn in 2025, the same level as the previous year, as uncertainty and volatility affected investor risk sentiment, the Investment Association (IA) has revealed.

Outflows were on course to eclipse 2024 levels but were boosted by £2bn of inflows in December 2025.

The IA said the continued yearly redemptions reflected significant uncertainty, initially driven by a shifting geopolitical landscape over trade and defence, before pre-Budget speculation and US equity market concentration concerns affected behaviour in the second half of the year.

However, the association noted that markets had shown resilience with 9 per cent annual growth in funds under management, rising from £1.49trn to £1.62trn over the year.

While this did not result in an annual inflow, asset classes such as money market, mixed asset funds, and fixed income saw consistent flows in 2025 as investors adopted a risk-off sentiment.

Inflows totalling £4.7bn in the second quarter were more than offset by the outflows in Q1 (£2.3bn), Q3 (£2.7bn), and Q4 (£2bn).

Equity funds saw outflows of £16.8bn over the year amid concerns about high exposure to large cap US tech stocks, including £4.8bn of outflows for global equities.

This sentiment boosted European equities slightly, with inflows of £761m in 2025.

However, this was not enough for positive flows for the region, which saw total outflows of £11.1bn over the year.

Money market and mixed asset funds were the best-selling asset classes in 2025 overall, attracting inflows of £6.9bn and £4.5bn respectively.

Fixed income funds saw £1.1bn of inflows in 2025, down from £3.6bn in 2024, with mixed bond funds the most popular.

Tracker funds attracted £12.8bn of inflows in 2025, although this was down from £27.6bn in 2024.

Outflows from actively managed funds eased significantly over the year, falling from £29.9bn in 2024 to £15.1bn in 2025.

“2025 saw a small outflow from UK retail funds,” said IA director, market insight & fund sectors, Miranda Seath.

“Through extended periods of geopolitical and market uncertainty, investors were cautious. In 2025, investors rotated away from US and global equity strategies and into diversified, lower‑risk asset classes, such as money market, mixed asset and mixed bond funds.

“We end the year on a positive note, seeing £2bn flow in through December across fixed income and mixed asset as equity outflows softened substantially.

“Looking forward, we expect 2026 to see retail fund flows to continue to build back. Demand for diversified, lower risk allocations looks set to continue in a climate of persisting geopolitical uncertainty, evolving monetary policy in the UK and the US and ongoing concerns around high US equity valuations.

“At the same time, investing is a long-term game. The Leeds Reforms provide a once in a generation framework to bring more UK adults into investing: the stage is set to drive an increase in retail investment across the UK.”

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