Net UK fund sales ‘muted’ in Q1 amid geopolitical tensions

Net UK fund sales were ‘muted’ in the first quarter of 2026 as heightened market volatility continued and geopolitical tensions renewed in the Middle East, ISS Market Intelligence’s (MI) latest Pridham Report has found.

The report showed total retail net sales were approximately -£5bn in Q1, broadly in line with the fourth quarter of 2025.

ISS MI noted that this was a negligible fraction of the more than £1.5trn of total assets under management in the UK.

Despite the slight outflows, 56 per cent of reporting fund groups experienced increased quarterly onshore and offshore net retail sales in Q1.

Although net sales were broadly flat, gross sales growth ended the quarter positively as advisers and investors continued to reposition their portfolios.

ISS MI said the trend was also driven by portfolios increasingly being outsourced to model portfolio services (MPS) and unitised multi-asset strategies.

These outsourcing decisions often led to a portfolio seeing a significant turnover in the funds selected, the firm noted.

However, it added that volatility had not driven investors decisively in one direction or another, with flows spread relatively evenly across strategies and asset classes.

The report found that Asian equities, emerging markets, and absolute return strategies continued to attract attention as diversifiers, while multi-asset and unitised MPS solutions remained “comparatively resilient”.

Money market funds continued to attract interest from investors amid ongoing defensive positioning within portfolios.

Meanwhile, long-term active single-strategy funds and passive equity strategies struggled in Q1.

“While net sales were muted in the first quarter, that only tells part of the story,” commented ISS MI head of research development, EMEA & North America, and report author, Benjamin Reed-Hurwitz.

“Beneath the surface, there was still a considerable amount of portfolio activity as advisers and fund selectors continued to reposition in response to volatility and an increasingly uncertain geopolitical backdrop.

“What stands out is that flows were not moving in one clear direction. Instead, we saw continued demand for diversification across a broad range of strategies, from emerging markets and Asian equities through to absolute return and money market solutions.

“MPS and multi-asset solutions also continued to attract flows, although the picture underneath those allocations is becoming increasingly nuanced. In periods like this, it becomes harder to distinguish between genuinely new money entering the market and ongoing portfolio rebalancing within existing investment structures.”

---