Bearish investors pulled £6.7bn from open-ended equity funds last year, with the total withdrawn from UK equity funds hitting over £54bn in the past decade, according to data from funds network Calastone.
Underlining the poor sentiment weighing on closed-end investment companies, where share price discounts remain prevalent, Calastone said the level of outflows from UK-based funds investing in shares in 2025 was the highest it had seen in its 11-year history, more than double the previous £3.3bn record set in 2016.
This followed an unprecedented seven consecutive months of net selling stoked by fears of Budget tax rises.
There was a chink of optimism in December as a net £188m outflow was the smallest since June, reversing outflows of over £3bn in both October and November when media reports of chancellor Rachel Reeves’ intentions were at their height.
Edward Glyn, head of global markets at Calastone said: “The sudden, dramatic slowdown in outflows between November and December is a clear indicator that months of pre-Budget speculation contributed to the record outflows from equity funds between June and Budget Day.”
“But this isn’t the whole story,” he said, pointing to the £5.8bn that poured into money market funds. “Record money market inflows point to investors favouring the safety of cash, suggesting they perceive equity valuations to be teetering after a dramatic 2025 bull run.”
Meanwhile, he added, “solid” inflows of £11.7bn to mixed asset funds and £1.5bn into fixed income funds in 2025 pointed to a “risk-off” sentiment among investors.
However, the overall picture for actively managed funds, and UK equity funds in particular, remains extremely challenging.
Active funds bore the brunt of the investor exodus, seeing £18.9bn of capital walk out of the door in 2025, up from £2.4bn in 224, while passive, index-tracking equity funds took in £12.2bn, down from a £29.6bn peak in the previous year.
The FTSE 100’s rapid recovery last year did not abate the pace at which UK investors are disinvesting from their home market as they use global benchmarks to reduce their domestic equity exposure to around 4%. Despite the blue-chip index notching up successive highs with a 21.5% rise in 2025, UK equity funds suffered their tenth consecutive year of withdrawals, with £9.5bn of outflows matching those of the previous year. That brought the total withdrawn over a decade to £54.3bn.
December again showed some relenting in the selling pressure with net sales of UK equity funds slowing to £541m from £847m, although this was in contrast to other sectors where inflows increased. Calastone saw the biggest improvements in North American funds, where November’s £812m outflow turned into a £107m inflow in December, and global funds, which recovered from a £747m flight to inflows of £174m.
