Fund flows rose in April but did investors sell in May?
ISA season prompted the highest level of inflows into investment funds during April but the mood may have changed in May


Investors flocked to equity funds in April amid the ISA rush at the end of the tax year but were more muted in May, industry data shows.
April is typically a busy season for fund inflows as investors look to use up their ISA allowance.
Investment Association (IA) figures reflect this, with the trade body’s latest data showing UK retail investors placed a net £1.1 billion into funds in April, the strongest inflows of the year to date.
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However, separate figures from data provider Calastone show UK investors slowed their purchases of equity funds in May.
The provider’s data shows fund inflows dropped to £525 million.
It comes as investors may have been spooked by rising inflation, geopolitical tensions and ongoing concerns about Trump trade tariffs.
Some may have even followed the investment adage of “sell in May go away, don’t come back until St Leger’s Day.”
Edward Glyn, head of global markets at Calastone, said: “Global markets enjoyed strong gains in May as the Trump administration retreated from its extreme positions on tariffs. Investors bought into the rally but not with any great confidence.
“With so much uncertainty over inflation, interest rates, geopolitics and trade wars, it seems rational for investors to be cautious. Certainly, investors are being selective with where they put their capital.”
We look at where investors are putting their money.
Investors get selective on equity funds
April was a busy month for investors prepared to take more risk with equity funds.
The IA recorded £962 million of net retail sales into equity funds for the month, led by North American equities with inflows of £948 million.
Globally diversified equity funds also saw inflows of £872 million, while European equities recorded £106 million of investor money, a second month of inflows, according to the IA.
UK equity funds saw continued outflows of £817 million but easing slightly from £1.2 billion in March, the IA said.
Miranda Seath, director of market insight at the IA, said: “We’re beginning to see investor behaviour split into two camps. Investors with a risk-on approach are putting their money into North American equities. Meanwhile, more cautious investors are favouring diversification away from US stocks into Europe and moving funds into lower-risk vehicles such as money market funds.
”Looking ahead, the outlook for global markets will remain unclear as long as uncertainty hangs over the economy and tariff policy remains changeable. If tariff threats do push up prices, central banks may delay cutting interest rates. That kind of scenario could mean that market turbulence persists.”
The market mood appears to have changed in May though.
Calastone’s figures show inflows to US equities dropped to £115 million, their second-worst month since September 2023, amid concerns about President Trump's trade policy.
European equities had their best month since June 2024, Calastone’s data suggests, as investors added a net £369 million to their holdings.
However, Calastone recorded global fund inflows of £546 million, which it said is around a third of their three-year monthly average.
Outflows from UK-focused equity funds slowed for the second month in a row, Calastone said, dropping to £449 million, just over half the average monthly outflow over the past three years.
Glyn added: “The UK stock market is flirting with the all-time high it reached in February this year. This recovery has not been enough to spur new buyers to reappraise the prospects for UK equities, but it seems to be reassuring some would-be sellers that perhaps the long-awaited re-rating is underway.
"The relentless outflows from UK-focused funds in recent years represented a clear capitulation on hopes for UK shares.
“It’s too soon to call an end to this trend, but a less negative narrative is a necessary first step.”
Are bonds set for a boost?
The IA’s April data showed bond funds continued to see heavy outflows in April of £1.8 billion, with record outflows of £177 million in high yield.
But more recent data for May from Calastone shows fixed income funds saw inflows last month for the first time since February. Investors added £328 million to their holdings, Calastone said.
Sovereign bond funds saw the biggest benefit, with investors adding £182 million in May.
Glyn added: “Bond yields climbed strongly during May, suppressing bond prices, as concerns over government solvency and inflation took their toll, but they clearly reached levels tempting enough to spur investors to lock new capital into high yields.”
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Marc Shoffman is an award-winning freelance journalist specialising in business, personal finance and property. His work has appeared in print and online publications ranging from FT Business to The Times, Mail on Sunday and the i newspaper. He also co-presents the In For A Penny financial planning podcast.
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