Equity index tracker fund demand drives positive retail flows in January

Net retail fund sales recorded inflows of £484m in January, driven by investor demand for equity index trackers, data from the Investment Association (IA) has revealed.

This was the third consecutive month of positive net flows, although January’s total was lower than December’s inflows of £1.9bn, as headline equity redemptions of £2bn drove outflows.

Global and North American equity index trackers saw inflows of £1.1bn in January, although active equity funds experienced outflows of £3.1bn.

The IA said this suggested a “tempered return” to low-cost equity exposure.

Overall, equity outflows rose to £2bn, driven by the UK (£684m) and global (£532m), while global emerging markets was one of the only equity sectors to see inflows overall (£135m).

Tracker funds saw inflows of £1.3bn overall, while fixed income inflows totalled £491m in January.

Money market fund inflows were £712m in January and mixed asset funds recorded £630m of inflows.

'Other' sectors saw inflows of £725m, led by volatility managed funds (£377m), while responsible investment outflows eased to £271m.

IA director, market insight & fund sectors, Miranda Seath, said that January’s inflows were a positive result in an environment of persistent geopolitical uncertainty.

“Investors have moved back to allocating to US and global equities but have chosen exposure through low-cost index funds,” she continued.

“This follows solid US market performance in 2025. But as high active equity outflows show, investors are still managing their exposure to risk assets – flows to fixed income and money market funds confirm that many investors remain wary of market volatility.

“Looking ahead, and particularly as we wait to see the impact of the Iran conflict on the cost of energy and consequently price inflation, it is important to remember that investing remains critical to delivering growth compared with cash, where inflation could erode savings longer term.

“With the Chancellor signalling policy stability with a measured Spring Statement and ISA season approaching on 6 April, the coming months will show whether confidence in markets could continue to rebuild.

“However, elevated geopolitical risks - may serve as a reminder to investors on how quickly volatility can return to financial markets.”

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