UK retail investors pulled a net £4.5 billion from funds in October, according to the latest data from the Investment Association.
It marks the weakest month since October 2024 and a sharp increase on September’s outflows of £536 million amid growing caution in the run up to the Autumn Budget.
Equity funds saw the largest impact, with £5 billion withdrawn across all major regions, led by steep redemptions from Global and UK equities. The figure was nearly double September’s £2.6 billion.
Mixed asset funds also came under pressure, posting their first outflows since October 2024.
The IA said concerns around exposure to US technology stocks and a potential AI bubble also weighed on sentiment, with the IA’s technology and technology innovation sector recording its largest ever outflow of £322 million.
Meanwhile, index tracker funds posted modest inflows of £306 million, underscoring widespread subdued sentiment.
Miranda Seath, director, market insight and fund sectors at the Investment Association, said: “October’s data indicates a marked decline in investor sentiment as investors responded to speculation ahead of the Autumn Budget around potential changes to pensions tax.
“With this year’s Budget now in the rearview mirror, we can expect to see further changes to investor behaviour in the coming months. While headline tax rates remain unchanged, the practical impact of fiscal drag and incremental tax rises means investors will be reassessing their ability to put money aside to invest and a more uncertain economic outlook could affect risk appetite.”
Kate Marshall, lead investment analyst at Hargreaves Lansdown, added: “October’s figures highlight how uncertainty over potential tax changes can influence investor behaviour. With the Budget now delivered, clarity may help stabilise conditions, although the cumulative impact of fiscal drag and targeted tax increases could continue to weigh on long-term planning.”
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