Investors take £622 million from North American equity funds, as US tariffs and policy environment starts to bite - IA monthly retail stats

Investors placed £2.0 billion into funds in May, up from £1.1 billion in April, according to data published by the Investment Association (IA) today.

However, May marked a significant shift in sentiment as uncertainty over the impact of US policy and tariffs on the outlook for returns triggered the first outflows from North American equities in six months. Investors withdrew £622 million from North American equities, including a record £303 million from funds investing in smaller US companies’, reversing April’s £962 million inflows.

A record monthly outflow (£525 million) from the Global Emerging Market sector, reinforces that investors are reducing exposure to regions that may be adversely affected by the impact of tariffs.  

Key findings for May

• Equity funds saw net retail outflows of £564 million, following strong inflows in April.
• Fixed income fund sales rebounded with £1.1 billion inflows, led by gilt funds which saw £453 million inflows, the second highest inflow behind record inflows in November 2023.
• UK equity funds saw outflows reduce to £348 million, the strongest month since August 2021.
• IA Global Emerging Market sector was the worst selling sector with outflows of £525 million triggered by US tariff concerns, a significant increase from the £62 million outflows in April.
• Tracker funds saw a net retail inflow of £1.9 billion, while active funds saw a modest inflow of £142 million.

Equity update – investors reduce US exposure and uncertainty squeezes allocation to emerging markets

As concerns mounted over the impact of trade restrictions on the outlook for the growth of the US economy and inflation, raising the spectre of stagflation, investors sought to reduce their exposure to US equities. This follows inflows of £3.5 billion into funds investing in North America last year as the performance of US stocks soared in 2024. But in a more volatile environment for US equity performance, investors have sought out global diversification and European equities to re-adjust portfolios away from the US. This follows strong inflows to North American equities in April, when the initial tariff announcements were made on Liberation Day, as some investors took advantage of the initial fall in US markets to ‘buy the dip’.

Globally diversified equity funds saw strong momentum, attracting £558 million of inflows, the highest across all equity regions. European equities also benefitted, with inflows accelerating to £435 million, supported by new commitments to infrastructure and defence spending across the continent.

While UK equities remained in outflow (£348 million), May marked the lowest outflow since August 2021. UK company valuations remain cheap and the UK has managed to tread a careful line between negotiating relatively low US tariffs and shoring up relations with Europe, its largest trading partner, as mid-May saw the introduction of the new EU–UK deal, easing trade frictions and signalling a potentially closer trade relationship.

With recent months seeing heightened market volatility, global emerging markets have been among the most exposed, particularly to the impact of tariffs on global trade and the potential re-shaping of global supply chains. With emerging markets more heavily reliant on trade in physical goods and commodities, which have been the focus of US tariff policy, the sector saw outflows accelerate to £525 million in May a steep rise from £62 million in April – and close to the record outflows of £673 million in January 2025.

Fixed income sales rebound as Gilt inflows approach record levels

Fixed income funds attracted £1.1 billion in inflows, reversing the £1.8 billion outflow recorded in April. Investors strongly preferred the safety of government bonds in May, which have the highest credit ratings indicating the lowest risk of default. UK Gilt funds led the sales rebound with £453 million inflows, the highest since November 2023 (£584 million) and the second strongest month on record, followed by inflows into Corporate Bond funds of £315 million.

Investment Association’s new SDR label data

In May, the Investment Association introduced a new data to help track net retail sales to SDR-labelled funds. This data will help to track investor demand for funds with SDR labels and provide insights into sentiment towards sustainable funds. The first monthly data showed net outflows of £471 million from SDR labelled funds, suggesting that investor demand for sustainability focused investment strategies remains weak in the face of ongoing macro and market volatility.

Miranda Seath, Director, Market Insight & Fund Sectors at the Investment Association, said:

“May marked a clear inflection point in investor sentiment and portfolio positioning, as capital shifted away from US and emerging market equities in response to intensifying global trade uncertainty and increased geopolitical risk. Having bought the dip in US markets in April, investors stepped back from US exposure in May, opting for globally diversified funds to help mitigate risk.

“This shift in sentiment also benefited sales to European equity funds, where European stocks have performed well in 2025, and helped to stem outflows from UK equity funds. While UK equity funds remain in net outflow, the UK government has stated that it is focused on attracting greater capital flows from UK investors to domestic capital markets and private assets as it goes for growth. Investors will be watching the Autumn Budget carefully to see if the UK Chancellor can manage the deficit without pursuing further tax rises, which could dampen business sentiment and consumer spending.

“The road ahead however remains bumpy, and not just in the UK - with the July 9^th US tariff deadline approaching and longer term, a clear shift in the trajectory of global trading partnerships as well as an escalation in global conflicts, market volatility looks set to continue.”  

 

APPENDIX

You can view the full data tables for May 2025 here.  

FUNDS UNDER MANAGEMENT AND NET SALES – May 2025 

	Funds Under Management	Net Retail Sales	Net Institutional Sales
May 2025	£1.5billion	£2 billion	-£2.5 billion
May 2024	£1.48 billion	-£123 million	-£1.5 billion

BEST SELLING INVESTMENT ASSOCIATION SECTORS

The five best-selling Investment Association sectors for May 2025 were:  

1. Global with net retail sales of £719 billion. 
2. Short Term Money Market with net retail sales of £631 million.
3. Europe Excluding UK with net retail sales of £456 million.
4. UK Gilts with net retail sales of £453 million.
5. Volatility Managed with £409 million.    

The worst-selling Investment Association sector in May 2025 was Global Emerging Markets which experienced outflows of £525 million.   

NET RETAIL SALES BY ASSET CLASS  

Fixed Income saw £1.1 billion in inflows.  

Money Market saw £688 million in inflows. 

Other saw £611million in inflows. 

Mixed Asset saw £272 million in inflows.  

Equities saw £564 million in outflows. 

Property saw £57 million in outflows. 

NET RETAIL SALES OF EQUITY FUNDS BY REGION*    

Global saw net retail inflows of £558 million.  

Europe funds experienced inflows of £435 million.  

Japan funds saw net retail inflows of £56 million. 

Asia funds experienced outflows of £238 million  

UK funds experienced outflows of £348 million. 

North America funds saw net retail outflows of £622 million.

TRACKER FUNDS  

Tracker funds saw net retail inflows of £1.9 billion in May 2025. Tracker funds under management stood at £377.7 billion at the end of May. Their overall share of industry funds under management was 25.2%.  Actively managed funds saw net retail inflows of £143 million in May 2025.

RESPONSIBLE INVESTMENT FUNDS  

Responsible investment funds saw a net retail outflow of £809 million in May 2025. Responsible investment funds under management stood at £98.8 billion at the end of May. Their overall share of industry funds under management was 6.6%.