Retail investors continued to show a preference for fixed income investments in August, according to the latest data from the fund managers' trade body the Investment Association (IA).
Fixed income funds attracted inflows of £656m from retail investors in August, bringing total flows for the year to date to a substantial £6.1bn.
£ Strategic Bond, which is predominantly comprised of active funds, was the best-selling IA sector in August with retail sales of £367m.
The IA noted this highlighted investor appetite for actively managed fixed income strategies, which have the flexibility to adjust to changing market conditions including responding to a changing outlook for interest rates.
There were also strong sales for Mixed Bond funds of £209m.
UK Gilts faced a more challenging month, experiencing outflows of £183m. Inflows to Government Bonds narrowed to £62m, down from £674m in June and £333m in July. The fall in sales comes as yields continue to rise across US Treasuries and UK Gilts, reflecting market sentiment over the risk that the deficit in the US and the UK continues to rise plus expectations for persistent inflation and consequently the decision to raise interest rates.
Net retail sales for investment funds were £894m in August, the tenth consecutive month of retail inflows, and a notable change from the £1.8bn of outflows recorded in August 2025.
Overall, 2026 has seen sustained inflows each month and, while historically retail funds see a seasonal sales lull in August, the monthly inflow brings net retail sales for the year to date to £13.8bn.
Mixed asset funds recorded inflows of £749m in August, making it the only asset class to see positive sales in each month in 2026 as investors continued to seek exposure to what the IA describes as a ‘ready made’ mix of stocks and bonds.
UK equity outflows softened significantly from July, recording -£615m in August, down from -£1.6bn the previous month following July’s period of political transition.
Miranda Seath, director of market insight and fund sectors at the Investment Association, warned that September and October may be more volatile for retail investors.
She said: “With the Autumn Budget fast-approaching, it is worth remembering that policy stability is a fundamental pillar of investor confidence. In October 2025, the last full month before the previous Budget, UK retail investors withdrew £4.5bn from investments, including £1.4bn from UK equities, amid concerns about reported tax changes.
“Frequent or speculative changes undermine the ability of savers to plan and invest for the long-term. This is reflected in our recent investor polling which found that two in five adults (38%) agree that changing pensions policy in the UK makes it harder to plan for their financial future, rising to 45% among Gen Z.
“As we look ahead to John Healey’s first Budget, there is a clear argument that providing greater policy certainty can help create the conditions for people to invest for the long-term.”
The five best-selling Investment Association sectors for August 2026 were:
- £ Strategic Bond saw net retail inflows of £367.1m
- Volatility Managed saw net retail inflows of £338.1m
- Global saw net retail inflows of £256.3m
- Global Emerging Markets saw net retail inflows of £253.3m
- Mixed Bond saw net retail inflows of £208.9m