The latest  figures from fund manager trade body the Investment Association (IA) suggest that UK investors have split into two camps on the direction of markets - some investing to take advantage of recovery and others nervous about prospects.

The IA says that market volatility and geopolitical uncertainty split investor behaviour in the first half of the year.

IA Monthly Retail Stats show that inflows of £438m into funds throughout June ended a “more positive second half” after a “volatile six months” globally at Trump tariff threats caused global market wobbles.

Net fund inflows reached £2.9bn in H1, underlining positive sentiment from many investors after outflows of £1.9bn in Q1.

However, according to the IA investor behaviour was “polarised”, with some utilising volatile markets to invest while others opted for lower-risk and more diversified investment solutions.

Money Market funds recorded their fifth consecutive month of inflows, with £823m in June bringing H1 totals to £3.8 billion, as some professional investors adopted a ‘wait-and-see’ approach.

Equities remained under pressure with £1bn pulled out in June, led by UK equity funds amid concerns over weak domestic growth.

Over the IA says that UK retail investors added a “modest” £438m to funds in June, bringing total inflows for the first half of 2025 to £2.9 billion.

The IA called the first six months of 2025 “a game of two halves” with a tough Q1 (-£1.9 bn) giving way to a much more positive Q2 with inflows of £4.8 billion.

The body called the geopolitical backdrop “turbulent” but some investors had taken advantage of market volatility in April by ‘buying the dip’, boosting sales of North American equities. Others preferred caution and portfolio diversification, opting for European equities or funds managed to volatility targets.

Growing interest in European assets reflected capital shifting away from the US, and the strong performance of Mixed Asset funds – with £2.6 billion inflows recorded in H1. The lion’s share of Mixed Asset flows went into the 40%-85% equities sector suggesting investors were not necessarily averse to higher risk and reward strategies, the IA said.

The IA said that this suggest some investors are happy to leave allocation decisions to professional investment managers in times of uncertainty. 

Key findings for June 2025:

• Equities saw heavy outflows of £1.0 billion in June, a shift from £549 million inflows in May.
• UK equities reached outflows of £964 million, the worst recorded in three months and an acceleration away from the relatively soft outflows of £356 million in May.
• North America was broadly flat in June with £52 million in net flows. However, this was split by inflows of £192 million into larger-cap strategies and outflows of £140 million from smaller companies.
• European equites remained in positive territory, attracting £198 million inflows in June but down on the £450 million inflow recorded in May.
• Fixed income funds added £193 million in June, down from £1.1 billion in May.
• Mixed Asset saw inflows of £502 million in June, with rare inflows recorded into the Mixed Investment 0-35% shares sector.
• Money Market funds recorded £823 million in inflows in June, marking a fifth consecutive month of positive flows with a net total of £4.3bn.
• Index trackers saw £1.1 billion in inflows in June, mostly into equity exposures across Europe, Global, and North America. UK equity tracker activity remained muted.
• Responsible Investment funds faced further outflows, with £447 million from SDR-labelled strategies and £365 million from wider responsible funds.

Key findings for H1 2025:

• Overall, H1 saw a small inflow of £2.9bn – pulled back by total inflows of £4.8bn in Q2 following outflows of £1.9bn in Q1.
• Total equity outflows reached £2.7 billion in the first half, with £6.3 billion pulled from UK strategies across the period.
• However, UK equity outflows halved to £2.1bn in Q2 compared to £4.2bn in Q1.
• The North America region saw £2.3 billion in net inflows over the first half, with outflows only recorded in May, before a return to modest inflows of £52 million in June.
• European equity inflows of £752 million in the second quarter reversed earlier losses, bringing total inflows to £514 million for the half year.
• Mixed assets saw £2.6 billion in inflows over the first half of the year, driven by demand for 40 to 85% equity strategies.
• Fixed income recorded £1.5 billion in outflows for the half year, nearly £1.0 billion of which came from £ Corporate Bonds.
• Total outflows for Responsible Investment reached £1.2 billion in the first half of the year.

Miranda Seath, director, market insight & fund sectors at the Investment Association, said: “After a rocky start to 2025, we’re starting to see the mood shifting among investors. Despite Q1 2025 recording outflows of £1.9bn, June continued the trend of monthly inflows and markets have remained resilient in the face of trade wars and uncertain tariff policy.

“We have seen some risk-on investors ‘buying the dip’ in the wake of Liberation Day. Others have taken risk off the table, opting for government bonds or diversifying away from the US and global emerging markets, economies that are more exposed to shifting global trade alliances.”

“Elsewhere, sustained inflows into mixed assets funds uncover an interesting trend as investors come back to ‘investment solutions’ – we had seen persistent outflows from the mixed asset class between 2022 and 2024. In the face of heightened uncertainty, investors are now opting for strategies where investment managers calibrate allocations to equities and bonds on their behalf.”

FUNDS UNDER MANAGEMENT AND NET SALES – June 2025

Source: Investment Association

BEST SELLING INVESTMENT ASSOCIATION SECTORS

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

1. Short Term Money Market with net retail sales of £683 million.
2. Mixed Investment 40-85% Shares with net retail sales of £377 million.
3. Europe Excluding UK with net retail sales of £218 million.
4. North America with net retail sales of £192 million.
5. Global Equity Income with £163 million.    

The worst-selling Investment Association sector in June 2025 was UK All Companies which experienced outflows of £627 million.   

NET RETAIL SALES BY ASSET CLASS  

Fixed Income saw £193 million in inflows.  

Money Market saw £823 million in inflows. 

Other saw £43 million in outflows 

Mixed Asset saw £502 million in inflows.  

Equities saw £966 million in outflows. 

Property saw £71 million in outflows. 

NET RETAIL SALES OF EQUITY FUNDS BY REGION    

Global saw net retail outflows of £148 million.  

Europe funds experienced inflows of £198 million.  

Japan funds saw net retail inflows of £127 million. 

Asia funds experienced outflows of £216 million  

UK funds experienced outflows of £964 million. 

North America funds saw net retail inflows of £52 million.

TRACKER FUNDS  

Tracker funds saw net retail inflows of £1.1 million in June 2025. Tracker funds under management stood at £382 billion at the end of June. Their overall share of industry funds under management was 25.3%. Actively managed funds saw net retail outflows of £620 million in June 2025.

RESPONSIBLE INVESTMENT FUNDS  

Responsible investment funds saw a net retail outflow of £365 million in June 2025. Responsible investment funds under management stood at £100.1 billion at the end of June. Their overall share of industry funds under management was 6.6%.