Retail investors pull £1.8bn from Funds in August – IA retail stats

• Index tracking funds saw their biggest ever monthly outflow, following a 22-month inflow streak 

• Equities bore the brunt of withdrawals, with almost £2 billion pulled from the sector, extending July’s £1.8 billion outflow 

• Government Bond funds recorded a sector high of £601 million in redemptions 

Thursday 2nd October 2025 - UK retail investors withdrew a net £1.8 billion from funds in August, a substantial jump from July’s £277 million, according to data from the Investment Association. Equity funds dominated outflows with £2.0 billion withdrawn, however outflows of £1.1 billion from fixed income trackers drove a record £387 million outflow from index trackers as a whole - the first outflow from trackers since October 2023. These outflows from bond index trackers were concentrated and may not necessarily reflect broader investor sentiment or prove sustained. 

The negative investor sentiment towards equities seen in July extended in August across all regions, driven by a combination of inflationary pressures and weakening expectations of interest rate cuts impacting risk appetites and investment strategies. UK investors are increasingly cautious amid continued uncertainty surrounding the longer-term impact of global trade tariffs. Concerns over elevated equity valuations may also have contributed to the retreat.  

Further caution has grown due to speculation around potential UK tax increases due in November’s Budget, a pattern observed last year when investors pulled £9.4 billion from funds in the two months leading up to the 2024 Budget.  

Finally, Government Bond funds experienced record outflows totalling £601 million. This coincided with growing concerns over the sustainability of UK, US and French debt amid large fiscal deficits, in turn pushing up yields on long dated debt. While funds usually tend towards much shorter durations, concerns over long-dated 30-year debt and government debt sustainability may be driving investors to reassess how they allocate to fixed income. 

 

Key findings for August 2025: 

• Equities saw heavy outflows of £2.0 billion, a continuation from £1.8 billion in July. UK equities led with £841 million in redemptions, while Japanese equities, despite their relatively small pool of funds under management, saw £272 million in outflows. 

• Fixed income remained in positive territory with £101 million of inflows, down from £529 million in July. Investors favoured Strategic Bond (£229m), Specialist Bond (£202m) and Global Emerging Markets – Local Currency (£182m) funds. 

• Government Bond funds saw significant outflows of £601 million following fiscal deficits and rising yields, though these were highly concentrated in long dated 30-year instruments, suggesting allocation shifts with UK Gilts (£15 million, after July’s £156 million inflow) and Corporate Bonds (£265 million) also seeing outflows.  

• Money Market funds inflows paused after six consecutive months, the longest run since 2018, with £119 million of net outflows in August. 

• Mixed asset funds attracted £180 million of inflows, with Mixed Investment 40-85% Shares being the bestselling sector totalling £246 million in inflows.  

• Index tracking funds recorded £387 million of outflows, as withdrawals from fixed income trackers outweighed inflows to equity trackers. 

 

Equities led the outflows

August recorded the highest equity outflows since January, with equity funds accounting for the majority of redemptions and increasing July’s £1.8 billion withdrawals to just shy of £2 billion as all regions faced outflows. UK equities led with £841 million in outflows and Japanese equities experienced redemptions of £272 million, their largest since record outflows of £584 million in May 2022. Moreover, European equity funds also recorded outflows of £15 million – their first outflow since February – signalling a change in pace in investors’ recent trend towards diversifying away from US and dollar-denominated assets. 

 

Fixed income inflows slowed, while mixed asset funds continued to attract investor demand 

Although fixed income funds remained in positive territory, momentum slowed sharply, falling from £529 million in July to £101 million in August as bond investors continued to favour Strategic Bond (£229m), Specialist Bond (£202m) and Global Emerging Markets - Local Currency (£182m) funds.  

Additionally, the consistent run of inflows for mixed asset funds continued by attracting £180 million of inflows in August, Mixed Investment 40-85% Shares remained the top selling mixed asset sector with inflows of £246 million.  

Conversely, UK Gilts and corporate bonds saw redemptions, with £15 million and £265 million respectively. 

 

Net retail sales by equity region, August 2024 – August 2025 

 

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

“While August is typically a quiet month, and this month especially so – with gross sales of £23.9 billion, down 10% when compared to August 2024 – the significant increase of £1.8 billion in net outflows does signal clear investor caution. The introduction of new tariff policies on 1 August heightened global trade uncertainty, while speculation around fiscal policy and perceptions that equity valuations may be peaking in certain markets further impacted investor activity.  

“Equities led outflows, reflecting rising caution and a reassessment of regional risks versus US dollar diversification. The outflows in index tracking and Government Bond funds also raises questions over the impact of deficits and inflation on certain asset classes. Instead, investors pivoted towards active and emerging strategies such as Strategic, Specialist and Emerging Market – Local Currency bond funds. 

“Looking ahead, sentiment is expected to remain cautious as markets balance stretched equity valuations, higher long-term bond yields and persistent political and fiscal uncertainties. In the UK, speculation over potential pensions reforms in the upcoming Autumn Budget may increase pressure, risking a repeat of the seasonal outflows observed before last year’s fiscal event.” 

 

APPENDIX 

FUNDS UNDER MANAGEMENT AND NET SALES – August 2025 

	Funds Under Management	Net Retail Sales	Net Institutional Sales
August 2025	£1.55 trillion	-£1.82 billion	-£394 million
August 2024	£1.51 trillion	£688 million	-£1.58 billion

    

BEST SELLING INVESTMENT ASSOCIATION SECTORS   

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

1. Volatility Managed saw net retail inflows of £278 million 

2. Mixed Investment 40-85% Shares saw net retail inflows of £246 million 

3. £ Strategic Bond saw net retail inflows of £229 million 

4. Specialist Bond saw net retail inflows of £202 million 

5. Global Emerging Markets Bond - Local Currency saw net retail inflows of £182 million 

The worst-selling Investment Association sector in August 2025 was UK All Companies which experienced outflows of £645 million.   

 

NET RETAIL SALES BY ASSET CLASS  

Mixed Asset saw £180 million in inflows. 

 

Fixed Income saw £101 million in inflows. 

 

Other saw £108 million in outflows.  

 

Money Market saw £119 million in outflows.  

 

Property saw £120 million in outflows. 

 

Equities saw £2 billion in outflows. 

 

NET RETAIL SALES OF EQUITY FUNDS BY REGION*   

Europe saw net retail outflows of £14 million.  

 

North America funds experienced outflows of £91 million. 

 

Asia funds experienced outflows of £243 million. 

  

Japan funds experienced outflows of £272 million.  

 

Global funds saw net retail outflows of £404 million. 

 

UK funds saw net retail outflows of £841 million. 

 

TRACKER FUNDS  

Tracker funds saw net retail outflows of £387 million in August 2025. Tracker funds under management stood at £396 billion at the end of August. Their overall share of industry funds under management was 25.5%.  

 

RESPONSIBLE INVESTMENT FUNDS  

Responsible investment funds saw a net retail outflow of £442 million in August 2025. Responsible investment funds under management stood at £102.4 billion at the end of August. Their overall share of industry funds under management was 6.6%.