The big comeback in UK fund popularity has been put on ice in March, judging by new fund sales data from the Investment Association (IA) released today. Dan Coatsworth, head of markets at AJ Bell, shares his insights.
Cold water has been poured over the long-awaited comeback in UK fund popularity after the conflict in Iran spooked investors.
February 2026 was the first month for net inflows into UK All Companies funds since July 2021, according to retail sales figures from the Investment Association. That raised hopes the UK market was finally shaking off its unloved reputation. Unfortunately, March’s figures showed the trend turned negative again, with £350 million of net outflows.
It might simply be that the UK comeback is on pause rather than over. Nearly all IA equity sectors saw net outflows in the month as it coincided with the start of the Middle East conflict.
| Net retail sales of UK All Companies sector (£m) | |
| Jul-21 | 307 |
| Apr-25 | -528 |
| May-25 | -164 |
| Jun-25 | -627 |
| Jul-25 | -496 |
| Aug-25 | -649 |
| Sep-25 | -625 |
| Oct-25 | -1015 |
| Nov-25 | -98 |
| Dec-25 | -399 |
| Jan-26 | -419 |
| Feb-26 | 24 |
| Mar-26 | -350 |
| Source: The IA | |
The switch in investor mood in March was illustrated by net inflows into money market funds nearly quadrupling to £2 billion from £551 million in February. These types of funds are designed to generate a return slightly higher than cash and are popular with investors looking to hold money in lower-risk assets.
Bond funds had a torrid time after four straight months of net inflows. March saw £966 million net outflows form the IA’s broader fixed income space, with high yield bonds and government bonds among the biggest outflows.
The spike in oil prices troubled the market because it points to renewed inflationary pressures. Central banks typically raise interest rates to fight inflation, and that can cause bond investors to sell in the hope of soon being able to get higher yields from newly issued bonds.
It’s fair to say that March was an unusual month because of how rapidly the Iran war escalated, yet the obvious conclusion from March’s IA data is a clear shift to a defensive mindset.
AJ Bell DIY investors continued to be active during the month, with more than two buys for every sell. That might reflect some portfolio repositioning but also a general long-term investing mindset where individuals continue to put money into their ISA or pension every month regardless of what’s happening in the markets.
