UK retail investors added a modest £438 million to funds in June, bringing total inflows for the first half of 2025 to £2.9 billion, according to data published by the Investment Association (IA) today.
The first six months of 2025 has been a game of two halves with a tough Q1 (-£1.9 bn) giving way to a much more positive Q2 with inflows of £4.8 billion.
A turbulent geopolitical backdrop polarised investor behaviour, with some taking advantage of market volatility through April and ‘buying the dip’, boosting sales to North American equities. Others preferred caution and portfolio diversification, opting for European equities or funds that are managed to volatility targets.
Growing interest in European assets reflects capital shifting away from the US, and the strong performance of Mixed Asset funds – with £2.6 billion inflows recorded in H1 – highlights the attraction for some investors of leaving allocation decisions to professional investment managers in times of uncertainty.
H1 inflows of £2.9 billion compares to £1.7 billion over the same period in 2024. Despite significant global market events, the monthly data suggests that investors have remained resilient – gradually re-entering markets and adjusting their portfolio to suit risk appetite.
Key findings for June 2025:
- Equities saw heavy outflows of £1.0 billion in June, a shift from £549 million inflows in May.
- UK equities reached outflows of £964 million, the worst recorded in three months and an acceleration away from the relatively soft outflows of £356 million in May.
- North America was broadly flat in June with £52 million in net flows. However, this was split by inflows of £192 million into larger-cap strategies and outflows of £140 million from smaller companies.
- European equites remained in positive territory, attracting £198 million inflows in June but down on the £450 million inflow recorded in May.
- Fixed income funds added £193 million in June, down from £1.1 billion in May.
- Mixed Asset saw inflows of £502 million in June, with rare inflows recorded into the Mixed Investment 0-35% shares sector.
- Money Market funds recorded £823 million in inflows in June, marking a fifth consecutive month of positive flows with a net total of £4.3bn.
- Index trackers saw £1.1 billion in inflows in June, mostly into equity exposures across Europe, Global, and North America. UK equity tracker activity remained muted.
- Responsible Investment funds faced further outflows, with £447 million from SDR-labelled strategies and £365 million from wider responsible funds.
Key findings for H1 2025:
- Overall, H1 saw a small inflow of £2.9bn – pulled back by total inflows of £4.8bn in Q2 following outflows of £1.9bn in Q1.
- Total equity outflows reached £2.7 billion in the first half, with £6.3 billion pulled from UK strategies across the period.
- However, UK equity outflows halved to £2.1bn in Q2 compared to £4.2bn in Q1.
- The North America region saw £2.3 billion in net inflows over the first half, with outflows only recorded in May, before a return to modest inflows of £52 million in June.
- European equity inflows of £752 million in the second quarter reversed earlier losses, bringing total inflows to £514 million for the half year.
- Mixed assets saw £2.6 billion in inflows over the first half of the year, driven by demand for 40 to 85% equity strategies.
- Fixed income recorded £1.5 billion in outflows for the half year, nearly £1.0 billion of which came from £ Corporate Bonds.
- Total outflows for Responsible Investment reached £1.2 billion in the first half of the year.
Mixed Assets make a comeback
Mixed asset funds have had a strong start to the year, attracting £2.6 billion in inflows throughout H1. This marks the asset class’s first consistent period of inflows since 2021.
In June, flows were concentrated in the 40–85% equity range, while the more cautious 0–35% segment saw rare inflows of £24 million. However, with the lion’s share of Mixed Asset flows going into the 40-85% equities sector, investors are not necessarily averse to higher risk and reward strategies. Mixed Asset funds offer greater opportunities for diversification with the additional security of a manager making the investment decisions on behalf of investors – an appealing prospect during times of uncertainty.
The appeal of the ‘investment solutions’ approach is also reflected in the consistent flows into volatility managed funds, which recorded inflows of £138 million in June.
June outflows cap weak first half for equities, but Europe looks on the up
Equities saw £1.0 billion in outflows in June, bringing total outflows to £2.7 billion for H1 2025. This is a sharp reversal from the £366 million inflows seen over the same period last year, as investors continued to shift more diversified mixed asset funds.
European equities remained a bright spot, taking in £198 million in June. While down from May’s £450 million, demand was supported by decent European equity performance. European equities may also be benefiting from investors who are reducing some exposure to US equities.
In addition, European government’s defence and infrastructure spending commitments may have helped sentiment, although the final EU/US tariff deal has not been received as a good outcome for the EU by economic commentators, which could affect the outlook for H2 flows. Q2 inflows to European equities totalled £752 million, reversing Q1 losses and resulting in £514 million in H1 net inflows.
Japanese equities attracted £127 million – the strongest monthly inflow since June 2024 – as hopes for a reasonable trade deal with the US emerged. Elsewhere in Asia, the Asia ex Japan sector continued to see redemptions, with £175 million in June outflows. The outlook for China and other Asian markets is more uncertain as global trade alliances re-shape given the US’ tougher stance on tariffs with these markets.
Index trackers maintained strong momentum with £1.1 billion inflows in June. Inflows were concentrated largely into European, Global, and North American equity sectors whilst UK All Companies remained out of favour.
Miranda Seath, Director, Market Insight & Fund Sectors at the Investment Association, commented:
“After a rocky start to 2025, we’re starting to see the mood shifting amongst investors. Despite Q1 2025 recording outflows of £1.9bn, June continued the trend of monthly inflows and markets have remained resilient in the face of trade wars and uncertain tariff policy.
“We have seen some risk-on investors ‘’buying the dip’ in the wake of Liberation Day. Others have taken risk off the table, opting for government bonds or diversifying away from the US and global emerging markets, economies that are more exposed to shifting global trade alliances. In times of market volatility, investors should carefully consider the right risk reward trade off and long-term goals should stay front of mind.
“Elsewhere, sustained inflows into mixed assets funds uncover an interesting trend as investors come back to ‘investment solutions’ – we had seen persistent outflows from the mixed asset class between 2022 and 2024. In the face of heightened uncertainty, investors are now opting for strategies where investment managers calibrate allocations to equities and bonds on their behalf.
“Closer to home, UK equity funds remained in net outflow in June. However, recent government efforts to re-energise domestic capital markets through the Leeds Reforms and Spending Review could signal a change on the horizon with efforts to create more of a culture of retail investment in the UK.
“IA research suggests that a level of home bias continues to exist amongst end investors and attracting more people to investing could be a boost to UK equities in the long-term. However, as June data suggests, the current crop of investors is keeping a close eye on the UK economy – the Chancellor’s plans for this year’s Autumn Budget will be significant and investors will wait to see the impact of potential tax rises and if the economic outlook will improve.”
