The trend of equity outflows from retail funds continued in July with outflows of £2.1bn, according to latest data from the Investment Association, the fund management trade body.
UK equity funds saw significant outflows of £1.6bn, the highest outflows seen since January 2025.
This was influenced by a period of political transition in the UK, with investors taking a cautious stance amid renewed debate on public finances with pressures from cost-of-living support, defence and borrowing costs.
Asia and Japan remained in negative territory, recording outflows of £97m and £81m, with the Global Emerging Markets sector recording a fourth consecutive month of outflows (£383m).
European equities returned to inflows for the first time since March, with net sales of £23m following outflows of £221m in June.
North America funds attracted £192m and Global funds received £50m.
Equity index trackers received £751m, while active equity funds saw outflows of £2.9bn. When investors become more cautious about prospective market volatility, active equity fund outflows tend to rise, while equity tracker sales are comparatively stable.
The five best-selling Investment Association sectors for July 2026 were:
- Volatility Managed - net retail inflows of £444.0m
- Short Term Money Market - net retail inflows of £406.3m
- Global - net retail inflows of £376.8m
- Government Bond - net retail inflows of £333.2m
- £ Strategic Bond - net retail inflows of £319.4m
Overall net retail sales saw inflows of £278m in July, marking nine consecutive months of positive flows. While this represents a sharp decline from the £3.6bn recorded in June, the sustained streak of positive flows underscores continued investor confidence, according to the Investment Association.
Mixed asset funds attracted £733m, down from £1.2bn in June, as investors continued to seek diversified exposure.
Fixed income funds experienced a fourth month of inflows with £863m in July, driven by positive flows into Government Bond (£333m), Strategic Bond (£319m), Mixed Bond (£181m) and Specialist Bond (£122m), as investors continued to seek potentially less volatile exposure than equities.
Money market funds recorded inflows of £206m, supported by £406m flowing into the Short Term Money Market sector, as investors favoured highly liquid investments amid heightened market uncertainty.
Responsible investment funds saw a net retail outflow of £123m in July 2026. Responsible investment funds under management stood at £112bn at the end of July. Their overall share of industry funds under management was 6.5%.
Miranda Seath, director, market insight & fund sectors at the Investment Association, said: “The composition of flows points to more cautious positioning, with investors continuing to favour fixed income and mixed asset funds while stepping back from equities.
“Investors will be looking ahead to the new government’s first Autumn Budget and the forthcoming 10-year plan for Britain in order to inform investment decisions based on the direction of economic, tax and investment policy, particularly in light of renewed inflationary pressure further tightening the UK’s fiscal headroom.
"While July’s uncertainty has led to muted flows, this month’s data suggests that many investors are not withdrawing from markets altogether, but are remaining selective and continuing to seek diversified, lower-cost exposure alongside more defensive allocations.”