Net retail sales outflows slowed in September to £505 million, which marks a significant improvement from August’s £1.8 billion outflows, according to data from the Investment Association (IA). The slowdown brought total Q3 outflows to £2.7 billion, following -£307 million in July and -£1.8 billion in August respectively.
The fall in outflows was supported by stronger sales to both fixed income funds, which had their highest inflows since May 2025 of £818 million, and mixed asset funds continuing their 10-month positive trend to reach £264 million in September. This partly offset rising equity outflows.
Investor caution towards equities persisted in September, with outflows rising to £2.6 billion from £2.0 billion in August. Europe was the only region to record positive equity flows, with £124 million in inflows. This reflects recent polling by the Investment Association which found that only half of investors felt confident that investing in companies from a broad range of markets, including the UK, US and Europe, would help them to meet their financial goals. Investors were most confident in Europe (54%) and global markets (55%).
Heading towards the November Budget, September’s outflows were significantly lower than the £3.8 billion recorded in September 2024. While equity fund redemptions remained substantial, this year’s movements appear to reflect broader investor caution over equity markets. Last year, investors with capital invested outside ISAs and SIPPs responded to speculation over a rise in capital gains tax by realising some of those gains to avoid a higher tax rate.
The shift in flows from equity funds into money market funds suggests that investors are anticipating market volatility, with rising speculation about a US market correction and an AI bubble. There is also a sustained trend to inflows in to mixed asset funds where the investment manager takes asset allocation decisions – a reflection of improving investor trust in an asset class that has not been favoured by investors since the 2022 market correction. Investors remain cautious about allocating more to equity funds.
Key findings for September 2025:
- Equity outflows remained elevated at £2.6 billion, up from £2.0 billion the previous month. European equities were the only region to see inflows, attracting £124 million.
- Fixed income funds recorded another strong month with £818 million in inflows, up from £104 million in August, led by Sterling Corporate Bond (£106 million) and Sterling Strategic Bond (£222 million) funds.
- Money market funds returned to inflows of £524 million as investors seek access to short-term cash like funds amidst market uncertainty.
- Mixed asset funds remained in favour, with inflows rising to £264 million (from £180 million in August), driven by Mixed Investment 40–85% shares, which accounted for £225 million.
- Index tracker funds rebounded with inflows of £1.2 billion, recovering from their largest-ever monthly outflow in August (£399 million).
Equities continue to dominate outflows
Equity outflows remained elevated at £2.6 billion in September, as investors continued to adjust allocations to manage risk. Europe was the only region to record inflows, at £124 million after a brief dip in August.
Globally diversified funds saw their largest redemptions since October 2024 at £1.3 billion, where US companies are a significant component. The concentration of high valuations in the largest seven US stocks has been fuelling speculation that there will be a price correction – particularly in the context of AI driven growth.
Indian equities experienced record outflows of £249 million, the highest ever net sales as a share of sector FUM (4.8%). Asian markets outside India were largely stable.
Healthcare equity funds saw outflows of £221 million (6.4% of sector FUM), with caution may related to renewed uncertainty following President Trump’s push to lower US drug prices and ensure that countries outside the US pay more for pharmaceuticals.
Closer to home, UK equity outflows remained steady at £795 million, a slight improvement from August’s £849 million. The region saw outflows of £2.3 billion over the quarter, in line with Q2 but an improvement on the heavy outflows of £4.1 billion in Q1.
Strong inflows across fixed income, mixed asset, money market and tracker funds
As investors continued to pull back from equities, fixed income attracted strong inflows of £818 million in September, the highest level since May 2025. Sterling corporate bond (£106 million) and sterling strategic bond (£222 million) funds led the gains, while emerging market – local currency strategies recorded a fifth consecutive month of inflows (£97 million).
Mixed asset funds also continued to attract inflows, rising to £264 million in September, with mixed investment 40–85% remaining popular for investors seeking professional guidance while retaining a high equity allocation. Money market funds returned to inflows of £524 million, reflecting the broader risk-off sentiment among investors.
Net retail sales by equity region, September 2024 – September 2025
Miranda Seath, Director, Market Insight & Fund Sectors at the Investment Association, said:
“September’s data show caution over equity funds prevailing among investors, with outflows of £505 million. While still negative, this is a marked improvement on September 2024 in the run up to last year’s Autumn Budget, when outflows reached £3.8 billion amid speculation around potential Capital Gain Tax hikes. We will look to see how investor sentiment develops in October. With a later Budget this year and rising speculation over pension tax changes, we hope that investors wait to see rather than making irreversible moves to take out tax-free lump sums from pensions
“Investor behaviour in September suggests patience rather than pessimism as they wait for greater clarity before making their next move. More broadly, our latest poll of UK adults shows that a perception that investing is risky remains the biggest barrier to investing for UK adults, underlining the need to transform how risk is communicated. Our work to support a re-framing of risk warnings as part of the Leeds Reforms will help potential investors better understand the risks and rewards of investing. Longer term, supporting an investment culture and consumer confidence will help to boost participation and strengthen long-term financial resilience for households and the economy.’’
