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"The UK is haemorrhaging investor sentiment" as UK equity funds see 47 out of 48 months of outflows

Journalist: David Belle, Newspage

ended 08. May 2025

On LinkedIn yesterday, Charles Hall at Peel Hunt posted the below chart of UK equity fund flows. Newspage asked IFAs and investment experts for their views on how the government can fix this problem, whether it is a problem (one says it isn't), and whether forcing pension funds and implementing ISA reform is enough to solve it. Views below.

6 responses from the Newspage community

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Rob Mansfield
Independent Financial Advisor at Rootes Wealth Management
It is a classic carrot and stick problem. The government seems to want to go for the stick approach and force pension schemes into buying patriotically. It would be better to focus on a carrot approach. There simply aren't enough quality companies of a sufficient scale to be able to buy the UK. Liquidity can be a challenge in some of these open ended funds. For example, the largest company in America's small cap index the Russell 2000, would comfortably sit in the top 10 in the FTSE100. It will take a long time but rather than bully pension schemes and mess around with ISA rules, the government should focus on British entrepreneurship and encourage long term ownership in the UK. Too many companies have been sold off to overseas buyers.
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David Belle
Founder and Trader at Fink Money
The UK is haemorrhaging investor sentiment. UK equity fund outflows in 47 of 48 months is a damning indictment of this country's perception by markets. It's another sign of Broken Britain. The government urgently needs to change the perception of the UK as an investment destination. They can do this by stopping being punitive on tax, by funding our own businesses like Rolls Royce rather than consistently selling out to foreign firms, and taking control of our internal talent. Our GDP per capita has been flat since 2018. It's time to ask why we have a higher population but lower living standards. This is all contributing to a deeply unattractive investing environment. The UK has squandered the opportunity of Brexit and not turning the nation into Singapore-on-sea. When the government forces anything, nothing in the market changes.
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Scott Gallacher
Director at Rowley Turton
The question presupposes that this is a problem or even a crisis. The government seems to have an unnatural obsession with forcing investors and pension fund holders to 'buy British'. Whilst there are net outflows from UK equity funds, someone must be buying the shareholdings sold, so there is no immediate impact on those underlying UK companies. In fact, the FTSE 100 Index is comfortably up over that period, so someone else must be buying. And, having taken the money out of those UK funds, investors have presumably either invested in international holdings, bringing future dividends and growth back into the UK, or spent it (boosting the UK economy), or saved it, again supporting lower interest rates, which also boosts the UK economy. Consequently, I can't see this is an issue, let alone a crisis, and investors should be encouraged to have a much more international view on investment.
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Wes Wilkes
CEO at IronMarket Wealth
More people have left UK equities than Brits fleeing a rainy bank holiday, but at least they come back when the sun shines. To stem this tide would require a radical rethink of the current government's plans, policies and intentions to make the UK an attractive place to invest, deploy capital and grow. And that seems a long way off right now.
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Kundan Bhaduri
Entrepreneur, Investor and Landlord at The Kushman Group
Britain’s economy is being strangled by timid policies and globalist complacency. Equity funds have bled cash for years straight and manufacturing output has now crashed to 9.4% of GDP, behind even Mexico, believe it or not! The same old isn't working, it’s time for bold nationalism. We must scrap punitive stamp duty choking retail investors, slash EU-era red tape suffocating small businesses, and unleash Freeports as tax-free hubs for British-made goods (not foreign imports). We must also divert £20bn R&D cash from vague “green tech” to resurrect our crown jewels: aerospace, pharmaceuticals, and sovereign AI. Reeves must force pensions to back UK firms, not offshore giants. To the naysayers, I say Brexit wasn’t about isolation, it was about prioritising British workers, wages, and supply chains. Boost GDP by axing corporation tax hikes, and blocking foreign vulture caps from buying critical infra. The world doesn’t respect weakness. Let’s finally make “Made in Britain” mean something.
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Faisal Sheikh
Managing Director at Monmouth Capital
What can this government do? The optimal scenario would be for it to get out of the way. Firstly, it should scrap Stamp Duty on share purchases. What is lost in revenue will be easily made up in benefits accruing from a more liquid market. Secondly, it should go much further in relaxing listing rules. They've basically built up like layers of sediment over the past 40 years. Sometimes it seems as if you can't even scratch your nose without a listed company having to issue a release to the market. Surely that was never the objective? The world has changed beyond recognition. It's quite reasonable to consider setting a fire to the whole lot and starting over, asking ourselves: what are the essential rules companies should comply with when listing in the UK? Our market is tiny on a global scale. It's time to think radically about how to make the London Stock Exchange relevant and an attractive place to list.