May was another strong month for flows, with £2.0 billion being invested into funds. Victoria Hasler, head of fund research, Hargreaves Lansdown has shared her thoughts on the data.
“May was another strong month for flows overall, with £2.0 billion being invested into funds. This number masks some big differences amongst asset classes and regions, however.
North American equity funds saw their first outflow since October last year, with £622 million being taken out of these funds, including £303 million from US smaller companies funds. It seems that, with tariff uncertainties still looming, investors took the opportunity to cash in some profits and reallocate.
Emerging market equity funds also performed poorly, with £525 million coming out of the sector. Many emerging market economies stand to be severely impacted by President Trump’s tariff regime, and investors fled the sector, instead opting for less risky areas.
Within equity regions, Europe was one of the biggest beneficiaries in May, with an inflow of £435 million as investors looked to invest in a more diverse range of sectors.
Global equity funds continued to take money in with an inflow of £558 million over the month. While this seems a little counterintuitive, as most global funds have the majority of their investments in US equities, it would seem that many investors are allocating to this sector in the hope that an experienced fund manager can take some of the worry out of navigating the markets during these turbulent times.
UK equity funds remain in outflow, with another £248 million coming out of the sector in May. This number is much smaller than that seen in either of the last two months, but a continuation of a trend.
Fixed income funds saw a resurgence in popularity this month, with £1.1 billion flowing into the fixed income sectors, led by an impressive £453 million into the UK gilt sector. Again, there seems to be a trend of diversification with investors seeking returns less linked to the US.
For the first time in a long time, an active fund topped the list of the most bought funds amongst HL’s client base in May – the Artemis Global Income fund. On the whole, income funds tend to be a little more defensive than the wider market and that, combined with this fund’s value bias, could be what attracted investors. Rathbone Global Opportunities, another active global fund also made the list at number eight. Otherwise, passives dominated in May, with global index funds still popular and a European index fund putting in an appearance at number ten.
Within investment trusts, little has changed with investors tending to stick to either the well-known and trusted stalwarts of the sector such as Scottish Mortgage Investment Trust and City of London Investment Trust, or to go for something completely different like infrastructure. Four infrastructure funds featured in the top ten list. Whether investors see them at a bargain with discounts still historically wide, value the income they provide or simply want some diversification in their portfolios is a matter of debate. A combination of all three seems likely.”
HL data
Top Funds, May 2025 (net buys, HL clients)Artemis Global IncomeUBS S&P 500 IndexFidelity Index WorldLegal & General International Index TrustLegal & General US IndexLegal & General Global Technology Index TrustVanguard FTSE Global All Cap IndexRathbone Global OpportunitiesHSBC FTSE All World IndexLegal & General European Index |
* excluding HL funds |
Top Investment Trusts, May 2025 (net buys, HL clients) |
Greencoat UK Wind plc Ordinary 1p |
SDCL Energy Efficiency Income Trust Plc ORD GBP0.01 |
City Of London Investment Trust Ordinary 25p Shares |
NextEnergy Solar Fund Ltd Ordinary NPV |
3i Group Plc Ordinary 73 19/22p |
JPMorgan Global Growth & Income plc Ordinary 5p |
Temple Bar Investment Trust plc ORD GBP0.05 |
F&C Investment Trust plc Ordinary 25p |
Scottish Mortgage Investment Trust plc Ordinary Shares 5p |
JPMorgan European Growth & Income plc ORD GBP0.005 |