Equity fund outflows increased to £1.44b in March, marking the worst month since November 2025, with global funds network Calastone citing the conflict in the Middle East as a key factor.
March was the seventh largest month on record for equity fund outflows, with selling broad-based across regions. European, Asia-Pacific, emerging market and Japanese equity funds recorded the sharpest deterioration, the data showed, either seeing inflows turn negative or seeing a rise in redemptions.
UK-focused equity funds registered the largest outflows in cash terms at £592m, up from £555m in February. However, the increase was modest compared with other regions.
Global equity funds also recorded net redemptions, with outflows narrowing to £205m from February. This marked only the eleventh month of net selling for the sector in Calastone’s 12-year record, with eight of those occurring over the past year.
Only North American equities attracted inflows, though these slowed to £99m in March from £371m the previous month.
Geopolitical tension injects volatility into markets
Rising yields, driven by oil-shock inflation concerns, led investors to withdraw £535m from bond funds, reversing February’s inflows. March represented the worst month for fixed income funds since April last year and the seventh worst on record.
Investors shifted cash into safe-haven assets, with money market funds attracting £228m of inflows, their strongest month since the UK Budget. Mixed-asset funds continued to see inflows, supported by regular savings allocations.
Edward Glyn, head of global markets at Calastone said: “Financial markets do not simply set prices – they are probability engines weighing the likelihood of future events. This helps explain why market movements, though large, have been relatively modest given the potential extent of the damage the oil crisis could have on the world economy. It also helps explain why outflows are not larger. Certainly, some fund investors are not waiting around to see what happens. They are voting with their feet and pulling capital out of risk assets in favour of cash. But the overall sentiment is not one of panic and outflows are still well below the levels caused by the Budget speculation – when retirees liquidated assets to beat a feared tax increase. For them, cashing in right away was important given a possible Budget cliff-edge.
Much of the effect of the conflict in the Middle East is still unknown, and most investors do not need immediate liquidity. Although there are notable outflows at the margin, most are content to stay invested knowing that most crises look like blips through a long-term lens.”
