James Carthew: Unloved UK equity trusts may deserve a second look
Investors have been divesting from UK equity funds en masse for years now, but they may be overlooking hidden value.
Outside of the US, 2025 was a good year for equity investors, with returns of 20% or more being commonplace.
The FTSE All-Share returned 23.9%, which you might think would be great news for UK investors. Unfortunately, most UK investors do not seem to have much exposure to their own market.
Some very depressing fund flow statistics from by Calastone last week showed that UK investors are deserting equity funds, with net outflows of £6.7bn over 2025. Actively managed equity funds were particular unloved with net outflows of £18.9bn last year.
These were especially notable for funds investing in UK equities, which lost £9.5bn to outflows. Money has flowed out of UK equity funds every year since 2015, losing a total of £54.6bn since then.
Similarly, a report published by the Pension Protection Fund in December showed that the proportion of UK defined benefit pension funds invested in listed equities had collapsed from 27.6% to 8.4% between 2016 and 2025. Over the same period, the proportion invested in UK listed equities fell from 6.8% to 0.7%.
Think tank New Financial painted a similar picture in September, revealing that the proportion of UK defined contribution pension funds invested in UK equities had fallen from 40% to 9% over the past decade.
This haemorrhaging of money from the UK equity market weighs heavily on… read more here