Retail fund inflows reached £1.1bn in April, the strongest inflows of 2025 so far and almost double the £519m seen in March, data from the Investment Association (IA) has revealed.

This marked the second consecutive month of fund inflows, after Q1 2025 saw the worst quarter since 2023, with net sales boosted by ISA season as investors looked to make the most of the changing tax year and new contribution allowances.

However, April’s inflows were well below those seen in April 2024 (£3.2bn) amid heightened geopolitical uncertainty.

Despite uncertainty around tariffs and trade policy in the US, North American equity inflows remained strong at £948m in April.

The IA stated that while this could be as a result of less risk averse investors buying the dip, the high inflows to money market funds (£1.1bn) showed prevailing caution among investors as they waited to see how markets would settle.

Overall, equity funds saw net retail sales of £962m, as globally diversified equity funds experienced inflows of £872m and European equities recorded £106m in inflows.

However, UK equity funds experienced continued outflows of £817m in April, although this a slight improvement from the £1.2bn of outflows in March.

Multi-asset fund inflows rose from £149m in March to £728m, the highest inflow since August 2021.

Bond funds saw outflows of £1.8bn in April, with high yield experiencing record outflows of £177m.

While index tracking funds took inflows of £969m in April, this marked the lowest inflows to index trackers since October 2024.

“A second consecutive month of net fund inflows suggests that investors do retain a degree of confidence, even as global economic uncertainty continues,” commented IA director, market insight and fund sectors, Miranda Seath.

“Whilst part of the pickup in flows is seasonal – many people have been making the most of their £20,000 ISA allowance before the 5 April tax-year deadline – we are also seeing genuine momentum in the markets. Notably, those willing to take on more risk have been investing in North American equities, buying the dip as valuations have fallen. This helped to give April’s inflows an extra boost.

“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.

“Closer to home, though, the recent UK-EU trade agreement is a promising development. The EU remains the UK’s biggest trading partner, and our trade relationship is now on a firmer footing. It could open up selective opportunities for investors interested in UK assets.”

---