Investors turn away from equity funds as UK continues to suffer outflows
Investors cut their exposure to equities last month, turning to bonds and money market funds, as UK-focused funds suffered another wave of withdrawals. UK investors withdrew £1bn from equity funds in October, up from £858m the prior month, marking the sixteenth month of outflows in the last seventeen, according to the latest fund flow index [...]
Investors are distancing themselves from equity funds, as the United Kingdom continues to experience a surge in fund outflows. UK investors withdrew £1 billion from equity funds in October, a significant increase from £858 million in the previous month. This marks the sixteenth consecutive month of outflows in the last seventeen, according to the latest fund flow index from Calastone.
The outflows from equities have also reached a nine-year high for a single month. Since the beginning of the year, equities have faced withdrawals of around £6.8 billion, with UK equity funds alone shedding £815 million in October, up from £708 million in September. The total outflows since the start of the year have amounted to £5.3 billion.
The rise in equity fund outflows is attributed to a decline in buying activity, as sell orders fell by just 0.3 percent month on month. Calastone's Head of Global Markets, Edward Glyn, noted that the Budget did not have an immediate impact on fund flows, suggesting that investors did not rush to secure gains before the tax increase.
However, the outflows from emerging market equities remained positive, attracting £131 million as investors continued to seek opportunities outside of concentrated Western markets. This is the only sector that has attracted new money across the last three months.
The gloom in the domestic market extended to North American outflows, which accelerated to £164 million, a further £40 million loss from September. Global funds saw a net loss of £229 million, while European and Japanese sector-focused funds also reported net selling. Passive funds witnessed their first negative month since August 2023, recording a loss of £44 million, indicating that the pullback from equities is not solely due to pressure on active managers.
Active funds saw outflows of £1.4 billion, while investors continued to flow into "safe-haven" money market funds, adding £516 million, the strongest inflows seen since November 2025.
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