Investor risk appetite returns despite geopolitical tensions – where are investors putting their money?
Investors favoured North American equities, passive funds and tech in April after several months of caution, latest industry data shows
Confidence in stock markets appears to be coming back as investors move out of defensive assets like money market funds in favour of equities, particularly those listed in the US, according to latest industry data.
Figures from trade body the Investment Association (IA) showed higher monthly inflows in April, rising to £1.5 billion, an increase on March’s figure of £1.3 billion.
Equity outflows reduced significantly over the month as global stocks rebounded, reflecting higher risk appetite and the ability to look past ongoing geopolitical uncertainty.
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The MSCI World Index returned 9.6% in April (in US dollar terms), its strongest monthly gain since 2020.
Equity funds reported outflows of £1.3 billion in March while April’s outflows were roughly half that, at £689 million.
Investors favoured equity index trackers over their actively managed equity fund peers, with £1.7 billion inflows compared with outflows from £2.4 billion, respectively.
Should I invest in US equities?
At sector level, North American equities led the charge, attracting £860 million – their highest monthly amount since April 2025.
Miranda Seath, director, market insight and fund sectors at the IA, said the big question was whether this momentum broadens out, or if geopolitical uncertainty keeps risk appetite fairly contained.
The trade body suggested strong earnings from several big tech names in recent weeks – Alphabet (NASDAQ: GOOGL), Meta (NASDAQ: META), Amazon (NASDAQ: AMZN) and Nvidia (NASDAQ: NVDA) all exceeded expectations, supported by continued investment in artificial intelligence (AI) likely contributed to higher demand.
This trend was underlined by £96 million of inflows into the IA Technology and Technology Innovation sector – its first in seven months.
It’s not just tech: 84% of the 485 S&P 500 companies that reported Q1 earnings beat analyst estimates, according to Bloomberg.
In contrast, regional equity fund sectors from UK, global emerging markets, Asia and Europe all reported net outflows, losing £673 million, £477 million, £399 million and £244 million, respectively.
Investing through volatile times
Money market funds – often used as a temporary shelter for investors when markets look uncertain – posted their first outflow since August 2025, with £755 million moving away from these more conservative strategies.There were record inflows to money market funds in the previous month.
Short-term Money Market was the worst-selling sector in April.
Seath said this was particularly striking. “For much of the past year, investors have been holding capital in short-term cash-like assets, understandably so, given the level of uncertainty in markets.
“The fact that we are now seeing that money begin to move is an encouraging sign that investors are starting to feel more confident in the investment outlook, particularly for the US following a strong month of North American equity inflows.
Similarly, the IA Targeted Absolute Return sector also witnessed outflows of £114 million, reversing three consecutive months of inflows.
Bond funds also returned to inflows of £466 million, with Mixed Bond the best-selling fixed income sector at £373 million, followed by Sterling Corporate Bond’s £85 million and Sterling High Yield, which had slightly lower inflows of £79 million. UK Gilts took in £67 million while Government Bonds had further outflows, with £147 million redeemed in April.
