UK investors returned to equities in April, ending a 10-month-long selling spree. According to the latest fund flow index from Calastone, investors added £1.1bn to equity funds last month, marking the best month of inflows since April 2025.
Concentrated Inflows
However, the flows were concentrated, with investors primarily committing capital to US equities and US-heavy global equity funds. These categories saw inflows of £1.1bn and £1.3bn, respectively. In contrast, all other categories experienced outflows. The Asia Pacific region recorded the heaviest outflows, with investors pulling out £383m. Emerging markets also suffered, seeing outflows of £355m, despite growing interest in tech stock investments in the region as a diversification strategy away from the US. European equity funds saw selling of £104m, while UK equities recorded outflows of £342m.
Although the UK outflows reinforce the view that many analysts continue to shun the UK stock market in favor of other markets, including the US, this was the best result for UK-focused funds since December 2024, when flows were damaged by the Autumn Budget.
Impact of Middle East Conflict
Calastone credited the concentrated inflows to the Middle Eastern conflict, arguing that the US has not been as impacted by the fallout. Edward Glyn, head of global markets at Calastone, said: “The war in the Middle East has strangled energy and feedstock flows to large parts of the world, leaving US supplies largely intact, even if prices are higher. The expected economic fallout means that Asia and Europe, the worst-affected regions, saw stock markets either flat or down in April. The gloomy outlook drove outflows from funds invested in most parts of the world.”
Glyn noted that the rally in the US “still looks narrow, with a small group of large-cap names doing most of the work,” but the gains were strong enough to pull flows back into US and global equity funds.
Safe-haven money market funds may also have skewed inflows to equities, as investors withdrew £671m in April, following a period of adding £3.78bn in the ten months of outflows between June 2025 and March 2026.
Property Fund Outflows Slow
UK investors continued to withdraw money from property funds in April, but the pace slowed to £21m, less than half the average in recent months. This is also the third best month for property funds since June 2024. Both buy and sell orders increased in April, but buy orders rose more sharply, by 25%, compared to 2% for sell orders.
Edward Glyn commented: “Higher income yields, following the repricing of assets through 2024 and 2025, may be beginning to attract capital back into the asset class. It is too early to call a full turnaround, not least because the economic calm from the Middle East crisis is likely to turn stormy soon. Even so, the sharp slowdown in outflows suggests sentiment may be stabilising.”
