Net retail sales recorded inflows of £2.5 billion in May, the highest figure in the last year and the seventh consecutive month of inflows, according to data published today by the Investment Association (IA).
Although the net sales total for May was the highest of the year, under the surface gross money coming into investments fell to the lowest levels since January but so did the amount UK investors were redeeming meaning that overall net inflows were high even as investor activity slowed across the month. Continued geopolitical uncertainty may have reinforced the slowdown in activity alongside the typical post ISA season lull.
Recent polling data conducted by the IA shows the impact of the Iran war and geopolitical turbulence on investor sentiment: 38% of investors polled said they had a higher overall level of caution when investing compared to six months ago in response to the Middle East conflict. For those intending to invest less in the new tax year, 28% polled in April cited market turbulence as a reason to invest less in 2026–27 (up from 15% in March).
Key findings for May 2026
Fixed income funds rebounded strongly, with inflows rising to £1.5 billion in May from £465 million in April. Active fixed income accounted for £1.0 billion of inflows, while mixed bond funds led sales with a record £626 million inflow.
Mixed asset funds attracted £1.7 billion. The Mixed Investment 40–85% Shares sector also recorded a sixth consecutive month of inflows, with £434 million.
Equity funds saw outflows of £1.5 billion, compared with £676 million in April, with broad-based redemptions across regions. Europe (-£435 million) and the UK (-£348 million) saw the largest outflows, while Japan was broadly flat at £8 million. Technology and Technology Innovation was the strongest equity sector, attracting £365 million after six consecutive months of outflows.
Money market funds recorded inflows of £158 million in May, following outflows of £755 million in April. This is more in line with the usual pattern of flow volatility in the sector, after an unusually sustained period of inflows over the past year.
Tracker funds recorded inflows of £1.1 billion, while active funds attracted £1.5 billion.
Volatility Managed funds continued to perform strongly, attracting £433 million of inflows in May.
Investors seek diversification amid market uncertainty
In May, investor demand was strongest for fixed income, which saw inflows of £1.5 billion, up from £465 million in the previous month. Mixed bond funds were the top-selling sector of the month, attracting a record £626 million, while volatility managed strategies also remained in favour, with inflows of £433 million.
Inflows into fixed income, mixed bonds and volatility-managed strategies highlights a continued shift towards diversification and income generation as investors continue to navigate market uncertainty.
The IA’s recent poll of retail investors reinforces this view, showing that among the 53% of investors who reported making changes to their portfolios, the highest proportion (17%) was to increase [1]
Technology turnaround as sector regains momentum
Meanwhile, equity funds saw outflows of £1.5 billion in May, compared with £676 million in April, with redemptions across the majority of regions. However, Technology and Technology Innovation was the strongest equity sector at £365 million, up from £102 million in April – following a previous six-month outflow period from October 2025 to March 2026.
AI is driving strong performance particularly in the semiconductor sector, which is benefiting focused investment strategies this month,
“Despite a complex global backdrop and market uncertainty, UK investors continued to remain invested. May marked the seventh month in a row that money flowed into retail funds, with net inflows reaching £2.5 billion – the strongest monthly total for a year.
“While people were slightly less active overall after the ISA season, the data suggests they are not turning away from investing. Instead, they are making considered choices about where to put their money, with strong demand for fixed income, mixed bond and volatility managed funds showing that many are looking for a balance of diversification, income and stability.
“Periods of geopolitical and economic uncertainty can understandably make investors cautious, but recent market reactions have been relatively short-lived compared with the volatility seen in 2022. Equity funds remain under pressure, but outflows are not at the levels seen in previous periods of stress. For investors, the key message remains that markets do recover, and staying invested through uncertainty is key.”
Miranda Seath, Director, Market Insight & Fund Sectors at the Investment Association
