UK investors pull a record £7.4 billion from equity funds since June amid valuation and tax-worry storm

11 November 2025

British investors have withdrawn a staggering £7.4 billion (roughly US $9.9 billion) from equity funds over the period from June to early November 2025, marking the longest consecutive stretch of net selling since the post-Brexit era.

Data from fund-network Calastone show that the series of monthly outflows now spans five months or more, with October alone witnessing a net withdrawal of £3.6 billion. The trend covers all equity categories from UK-focused funds to global, North American, and technology-heavy vehicles which all experienced net selling during the period.

The backdrop to the exodus from equity funds is one of multifaceted concern. On one hand, many investors are unnerved by what they see as elevated global stock valuations and the possibility that the long bull run led by tech and growth assets may be approaching a maturity phase. On the other hand, there is rising unease about the UK government’s upcoming budget (due later in November) and how it may impact tax treatment of investment returns especially capital-gains rules and other levies that could take a bite out of portfolio returns.

The behavioural shift in investor psychology shows up not just in the withdrawal numbers but in the destination of the funds: in October, a record £955 million flowed into money-market funds and another £589 million into fixed-income funds, signalling a flight to safety and liquidity.

For fund managers and asset-allocation professionals the implications are potentially serious. A sustained run of outflows places pressure on equity-fund performance, may lead to portfolio de-risking, and can restrict the ability of managers to hold positions in less liquid assets without facing redemption risk. It also opens questions about market liquidity, investor sentiment, and the potential for a sharper correction if risk appetite continues to wane.

Some market watchers interpret the flow data as a signal rather than a cause: once sentiment shifts, the mechanics of redemption can themselves exacerbate market weakness as funds sell assets to meet outflow demands, creating a feedback loop of further negative sentiment. The comparison to the post-2016 Brexit sell-off underscores how investors are treating this as a distinct regime shift rather than just a cyclical hiccup.

Another dimension to the story is the global mirror effect: U.S. data from Bank of America suggest that private clients there sold US $12 billion in equities over the preceding eight weeks the fastest pace of outflows the bank had seen in a year. The synchrony of multiple markets shifting away from equities suggests that the UK’s movement may be part of a broader global risk-off dynamic rather than a UK-specific event.

As for the UK government and policymakers, the outflow surge could raise alarm bells about private-investor confidence, household wealth, and the intermediary role of funds in capital markets. If taxes on investment returns are indeed raised, as some expect in the 26 November budget, the exit by retail and wealth-management investors could accelerate. The question becomes whether policymakers see this as temporary noise or a more structural redirection of savings away from risk assets.

From the vantage point of ordinary investors the message is one of caution: large-scale withdrawals often reflect collective concern about valuations, policies and liquidity but they can also create opportunities for those willing to stay invested. The disparity between those who act and those who wait may widen over time.

In sum this wave of withdrawals marks a critical juncture for UK investment flows. Whether it represents an over-hang of caution, the early stages of a further reallocation, or a genuine structural shift away from equities remains to be seen. What is clear is that asset managers, wealth advisers and policymakers will be watching closely, because investor attitude now appears less forgiving and more sensitive to value, regulation and global risk.