UK investors put their money into bond and mixed-asset funds in May while reducing holdings in money market and equity funds, according to the latest fund flow index from Calastone.
Mixed-asset funds gained £2.72bn during the month, suggesting investors favoured diversified portfolios that can provide both income and exposure to multiple asset classes.
Bond funds gained £877m in net inflows. Calastone said this was the strongest month for fixed income funds since June 2023.
Money market funds saw net outflows of £669, and equity funds lost £257m in May.
Emerging market, European and Asia-focused strategies accounted for much of the selling pressure.
US equity funds remained in positive territory, continuing to attract investor demand, while global equity funds recorded broadly flat flows over the month.
UK equity funds saw their first month of net inflows since November 2024.
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Edward Glyn, head of global markets at Calastone, said: “May’s data suggests investors were putting money back to work, but not without caution. Outflows from cash funds with inflows into both fixed income and multi-asset funds indicate that investors were ready to redeploy capital, but many chose diversification over concentration, favouring strategies that balance income, resilience and flexibility. Multi-asset funds offer a route into markets without requiring a high-conviction call on any one region or asset class.
Equity flows reflect that same caution – modestly reducing risk by withdrawing capital and then being picky on where to place it. Investors continued to favour the US, while pulling back from emerging markets, Europe, and Asia. The inflow to UK equity funds is encouraging and may indicate sentiment towards domestic assets is becoming less negative, but it was narrowly focused, therefore it’s too soon to call it a broader trend. Overall, May looked less like a return to risk and more like a carefully managed re-entry into markets.”
