UK investors placed £507 million into funds in March, according to data published by the Investment Association trade body today.
March’s modest inflows were boosted by investors making use of allowances before the end of the tax year, following two consecutive months of outflows during a tricky investing environment.
However, the first quarter of 2025 has been shaped by looming concerns over Trump administration tariffs, rising inflation and an uncertain interest rate outlook. Net retail sales totalled a £3.0 billion outflow in Q1, the worst quarter since the £8.6 billion outflow recorded in Q4 2023.
Key findings for March
Equity funds saw their first net inflow of 2025, with net retail sales of £535 million. North America continued to dominate equity inflows with net sales of £570 million despite market uncertainty.
UK equity outflows eased slightly from February but remained high at £1.2 billion, and saw the first inflows into European equities since July 2024.
Bond funds saw outflows of £1.3 billion, with outflows of £1.2 billion from across the Corporate Bond sectors. These outflows follow fixed income inflows of £159 million in February.
Money market funds took in £1.2 billion in net retail sales. While flows to money market funds are often volatile, these inflows may represent investors seeking flexibility ahead of longer-term allocation decisions.
Mixed asset funds saw inflows soften to £149 million, from £397 million in February.
Index trackers took in a net £1.4 billion, remaining strong though down on the net £2.2 billion in February. Equities dominated tracker inflows (£1.4 billion) with the strongest inflows to Global equity trackers (£617 million).
Key findings for Q1 2025
Despite March’s inflow, total net retail sales for Q1 saw a £2.9 billion outflow, the worst quarter since the £8.6 billion outflow in Q4 2023.
Q1 saw net retail outflows from equity funds of £3.9 billion, following a £3.4 billion outflow in Q4 2024.
However, North American equities continue to attract inflows, with net retail sales of £1.4 billion over the quarter, while UK equities saw their worst quarter on record with outflows of £4.2 billion.
Outflows in March (£1.3 billion) took the quarterly flows for bond funds into negative territory, with net retail outflows of £957 million. Q1 outflows follow a positive second half to 2024.
Mixed asset funds saw inflows of £634 million, the first quarterly inflow since Q1 2023.
Index tracking funds saw inflows of £5.2 billion, only a slight decline on the £5.3 billion inflow in Q4 2024. This follows a record £28.0 billion inflow into index trackers throughout 2024. Actively managed funds meanwhile saw outflows of £8.1 billion over Q1, up from £7.0 billion in Q4 2023.
Responsible investment funds saw record quarterly outflows of £1.8 billion, up slightly on the £1.7 billion outflow in Q4 2024.
Miranda Seath, Director, Market Insight & Fund Sectors at the Investment Association, said:
“Q1 was no easy ride for investors and outflows suggest that we’ve seen a drop in confidence following the more positive end to 2024.
“Whilst markets were initially buoyed by Trump’s victory in the US, volatile policymaking and uncertainty around the future of global trade make it challenging for investors to make clear cut decisions.
“This is reflected in the notably strong inflows into money market funds in March, as investors take a ‘wait and see’ approach.
“This uncertainty shows no sign of abating as investors await the full impact of the fallout from Trump’s global tariffs. Recognising the key headwinds and tailwinds for global markets, many investors will carefully assess their next move.”
The five best-selling Investment Association sectors for March 2025 were:
Short Term Money Market with net retail sales of £1.0 billion.
North America followed with net retail sales of £705 million.
Europe Excluding UK with net retail sales of £325 million.
Global Emerging Markets with net retail sales of £184 million.
Global was fifth with net retail sales of £109 million.
The worst-selling Investment Association sector in February 2025 was UK All Companies which experienced outflows of £893 million.
