UK investors have withdrawn more than £15 billion from equity funds during a sustained shift away from the asset class, even as Calastone reports that markets remain near record highs.
Equity funds suffered net outflows of £315 million in August, making it the fourth consecutive month of withdrawals and the 14th month of outflows in the past 15, according to the latest Calastone Fund Flow Index. Across the period since June 2025, investors have removed a net £15.16 billion from equity funds.
The August outflow was considerably smaller than the £1.61 billion withdrawn in July, representing a month-on-month reduction of approximately 80%. Although the slower pace suggests that the intensity of selling has eased, the persistence of the broader trend indicates that investor caution has not disappeared.
At the same time, bonds and money-market funds recorded net inflows. Bond funds attracted £407 million in August, while money-market funds received £364 million, their strongest monthly inflow since November.
The length of the withdrawal period is particularly notable because household saving and pension contributions ordinarily create a natural tendency for money to enter the fund market. Averaged across the 15 months from June 2025 to August 2026, the £15.16 billion net withdrawal from equity funds is equivalent to just over £1 billion per month, although the period included one month of net inflows.
Edward Glyn, head of global markets at Calastone, said investors were not panicking but were “stubbornly refusing to chase equity markets higher”. With markets close to record levels and interest-bearing assets offering more competitive returns, investors appear less willing to accept additional equity risk solely because share prices have continued to rise.
Strong market performance may itself encourage some withdrawals. Investors who have accumulated gains could decide to take profits, rebalance their portfolios or move money into assets offering more predictable income. The figures do not demonstrate that investors expect an imminent market fall; they show that purchases of equity funds by UK-based investors continue to be outweighed by redemptions.
The retreat was most pronounced among UK-focused funds, which suffered £601 million of net withdrawals during August. European equity funds lost £145 million, while specialist sector funds recorded outflows of £52 million. North American funds experienced their first outflow since November 2025, although the £3 million withdrawal represented only 0.06% of the £4.9 billion of combined purchases and sales processed in that category.
Because the withdrawal from UK-focused funds alone exceeded the £315 million overall equity-fund outflow, inflows into other equity sectors must have offset part of the selling. The headline total therefore conceals a more uneven pattern in which investors continued to reduce exposure to some markets while adding capital elsewhere.
Bond and money-market funds attracted a combined £771 million in August, more than twice the net amount withdrawn from equity funds. Across those three categories, the month produced an overall net inflow of £456 million, although that calculation excludes movements involving property, mixed-asset and other types of fund.
The longer-term comparison does not establish that money withdrawn from equities moved directly into interest-bearing funds. Bonds and money-market funds have absorbed £8.7 billion since June 2025, equivalent to approximately 57% of the £15.16 billion removed from equity funds, but net figures for separate asset classes cannot track where each redeemed pound was subsequently placed.
| Fund-flow measure | Net movement |
|---|---|
| Equity funds in August | −£315m |
| Bond funds in August | +£407m |
| Money-market funds in August | +£364m |
| Combined movement across these three categories | +£456m |
| Equity funds from June 2025 to August 2026 | −£15.16bn |
| Bonds and money-market funds over the same period | +£8.7bn |
| Average monthly equity outflow over the 15-month period | Approximately £1.01bn |
Money-market funds are sometimes described as “cash” because they invest in short-term, liquid instruments and generally seek to preserve capital while generating income. They are not equivalent to cash held in a bank account, however, and neither their value nor their return is guaranteed.
Their appeal can increase when short-term interest rates provide a meaningful return without requiring investors to accept the volatility associated with equities. Bond funds involve different risks, including sensitivity to interest-rate movements and the creditworthiness of issuers, but higher yields have also made them more competitive with shares.
August’s £364 million inflow into money-market funds was twice their average over the previous 12 months, while bond funds recorded a fourth successive month of positive flows. The pattern suggests that investors are placing greater emphasis on income, liquidity and limiting downside exposure, rather than withdrawing indiscriminately from every part of the fund market.
Calastone’s index is based on millions of buy and sell orders placed by UK-based investors into funds domiciled in the UK. Calastone says more than 85% of UK fund flows by value pass through its network, with the reported totals scaled to account for its share of the wider market.
The figures measure net flows—the difference between purchases and redemptions—rather than the total amount invested. They do not measure investment performance or reveal the circumstances and intentions of individual investors. An outflow can arise because redemptions increased, purchases declined or both occurred at the same time.
The country in which a fund is domiciled also does not determine where it invests. A UK-domiciled fund may hold assets in the United States, Europe, Japan or several global markets, so references to UK investors and UK-domiciled funds should not be interpreted as investment exclusively in British companies.
Calastone attributed part of the caution to continuing Budget speculation, particularly concerns about possible changes affecting capital gains and pension tax treatment. The wider movement towards bonds and money-market funds also reflects a change in the relative appeal of different assets: when comparatively defensive investments offer meaningful income, investors face less pressure to pursue returns through equities at elevated market levels.
The reduction in August’s outflow shows that selling was substantially less intense than in July, which Calastone recorded as the fifth-largest monthly equity-fund outflow in its 11-year series. Confirming a change in direction will require more than one quieter month, and subsequent Fund Flow Index releases will show whether investors are returning to equity funds or merely withdrawing money at a slower rate.
