Funds returned to inflow in March, but looming concerns over US tariffs, rising inflation and interest rate uncertainty has put a dampener on the first quarter, new data from the Investment Association reveals.
Investors placed £507 million into funds in March, as they sought to take advantage of allowances before the end of the tax year. It followed two consecutive months of outflows, during a tricky investing environment.
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 March also saw the first inflows into European equities since July 2024.
Meanwhile, money market funds took in £1.2 billion in net retail sales and index trackers took in a net £1.4 billion, remaining strong, although down on the net £2.2 billion seen in February. Equities dominated tracker inflows, accounting for £1.4 billion, with the strongest inflows to global equity trackers.
However, despite March’s inflow, total net retail sales saw a £2.9 billion outflow during the first quarter, making it the worst quarter since the £8.6 billion outflow recorded in the fourth quarter of 2023.
The Investment Association said net retail outflows from equity funds reached £3.9 billion in the first quarter, following a £3.4 billion outflow in the previous quarter.
Outflows in March took the quarterly flows for bond funds into negative territory, with net retail outflows of £957 million.
Responsible investment funds also saw record quarterly outflows of £1.8 billion, up slightly on the £1.7 billion outflow in the fourth quarter of 2024.
“The first quarter of 2025 has been shaped by looming concerns over Trump administration tariffs, rising inflation and an uncertain interest rate outlook,” the Investment Association said.
Main image: richard-horvath-_nWaeTF6qo0-unsplash
