Executive Summary
Aggregate flows 2025 was the second-worst year on record for net redemptions (-£34.18bn). Excluding money market funds (MMFs), it is the worst year on record (-£56.4bn).
Money market funds enjoyed the largest inflows (£22.22bn), while equities saw the largest redemptions (-£59.62bn).
Active funds suffered outflows of £208m, while passive mutual funds lost £39.17bn and ETFs attracted £4.6bn.
Money Market GBP attracted £21.29bn, while Mixed Asset GBP Aggressive – Global was the second-most popular classification, taking £12.42bn.
Equity US (-£13.09bn) and Equity Global (-£9.75bn) saw large redemptions, in contrast to last year.
Last year was the first post‑pandemic year in which all major asset classes generated positive returns, driven by risk‑on sentiment despite numerous macro and geopolitical uncertainties and outright upsets. That, however, has not translated into uniformly positive fund flows in the UK.
Global economies in 2025 were shaped by tariffs, geopolitical tensions, and shifting central bank policy. In April, the US imposed tariff rates not seen since the 1930s, triggering a drop in major equity markets early in the month before ongoing horse-trading restored confidence, and market pundits became obsessed with a crispy Mexican snack. Markets recovered late in the month, and despite ongoing concerns, continued to climb (more or less) over the year. Despite this, UK investors have pulled the largest sums from equity mutual funds and ETFs on record—the largest slice, once again, from domestic equities, despite their outperformance of global and US equities over the year. Indeed, the UK has been one of the best performing markets. Europe and Japan benefited from improving PMIs and moderating inflation, and equity markets here performed well, though UK fund allocations to the former was modest, and in the red with regard to the latter.
Inflation trended lower across major economies, enabling the European Central Bank (ECB) and other central banks to cut rates, while the Federal Reserve paused its easing cycle amid sticky core services inflation. Despite shocks, global GDP proved resilient, aided by fiscal stimulus in some regions.
Bond markets delivered positive returns, supported by easing inflation and expectations of rate cuts. Global bonds returned 8.2% in USD terms, while UK gilts and US Treasuries strengthened into Q4 as investors priced a more dovish 2026 outlook. Over the year, UK investors have favoured global bonds, UK gilts, and short-term bonds, while tending to shun corporate credit, a trend likely informed by historically tight spreads.
Asset Class Overview
Chart 1: Asset Class AUM by Year, 2006-2025 (£bn)
Source: LSEG Lipper
Over the 20 years covered by chart 1—or 2006 to 2025—total net assets (TNA) held in UK mutual funds and ETFs have risen from £509.82bn to £2.54trn, or a 499% increase. The asset classes that have increased by the largest amounts have done so from very low bases, and the largest relative increase—commodities—still makes up just 0.1% of total assets.
Over the two decades, of those assets classes that make up more than 10% of the total, mixed-assets funds have expanded their market share at the fastest rate, at 919%, and now make up 21.1% of all UK mutual fund and ETF TNA, followed by MMFs at 883%.
Despite being the quintessential growth asset, equity funds have grown at a below-trend 378%, with bonds also lagging at 378%. Over the long term, then, the story is one of an increasingly important role of MMFs, and of a market where mixed-assets funds have encroached on the territory of the two main asset classes—all, however, in an environment where fund assets have expanded at a faster rate than GDP or average income. All, that is, except one, as real estate has declined from £16.7bn TNA in 2006 to £14.7bn in 2025, and now makes up just 0.66% of fund assets.
Over the past year, other and commodity funds saw the fastest growth (69% and 68%, respectively). While this is the effect of (relatively) small number, it does nod to a strong year for commodities. Likewise, alternatives TNA was up by 10.4% over the year, MMFs by 8.7%, and mixed assets 6.1%.
Bond TNA rose by just 0.5%, while equities were up YoY by 2.5%, despite the ongoing bull market.
Real estate was the only asset class down in absolute terms over the year, from £17.15bn to £14.71bn, from a peak of £41.59bn in 2017.
Chart 2: Asset Class AUM by Year, 2006-2025 (%)
Source: LSEG Lipper
There have, of course, been significant shifts in the fund asset mix over a period that has encompassed one global financial crisis and one global pandemic, to mention but two lowlights.
Equities have remained the largest asset class. However, they have declined in percentage terms over time. In 2006, prior to the global financial crisis (GFC), they were 64.02% of total assets. The proportion trended in the mid-40s between 2011—a year when global equities indices saw significant falls—and 2020, from when it headed up, peaking in 2024 at 49.18%, before heading marginally down in 2025. While de-risking UK pension funds have no doubt had something to do with the overall reduction, it’s difficult to map one onto the other. As a broad generalisation, equity as a percentage of all assets has increased along with the bull run.
Bonds don’t seem to have been beneficiaries of the reduction in equity—in the long term, at least. In 2006, they were 17.06% of all assets, and in 2025, 15.7%. Their overall proportion peaked between 2011 and 2014, in the 18.7% to 20.1% range, inching down incrementally since, and are now below their wipeout year of 2022 (16.33%). That’s been to the relative benefit of mixed assets, which have risen, bit-by-bit, from 11.46% to 21.1% last year—their highest. Conservative MA funds may well have benefited from serving as proxy bond funds, delivering income when rates and yields were at historic lows, while aggressive strategies have fared consistently well since. Similarly, MMFs have offered decent yields at lower risk than bonds as yield curves were inverted and/or the short end of the curve elevated over recent years. Their relative take boosted most notably from 8.95% to 12.87% between 2007 and 2008, as investors rushed for the exits from risk assets.
Chart 3: Asset Class AUM, 2025 (%)
Source: LSEG Lipper
Which leads us to a snapshot at the end of 2025, with equity funds holding the largest share of assets (48.52%), followed by mixed assets (21.1%), bonds (15.7%), and MMFs (12.63%).
Chart 4: Asset Class Flows by Year, 2006-2025 (£bn)
Source: LSEG Lipper
Last year was the second-worst year on record for net redemptions (-£34.18bn, following 2023’s -£50.67bn). Excluding MMFs, it is the worst year on record (-£56.4bn, exceeding 2022’s -£42.94bn). As can be seen from chart 4, this is mainly a result of the large outflows from equity funds (-£59.62bn—again, the worst on record). There have been six negative periods for equity flows over the past 20 years, four of them over the past seven years.
Following two strong years for flows, bond funds saw redemptions of £629m over 2025. That’s on a par with the outflows in 2022, when spiking rates caused a crash in valuations in the asset class. The only other period of negative flows for bonds was in 2015
(-£6.66bn), a year that saw large outflows on bonds globally, spurred by thin liquidity, high volatility, and fear of another taper tantrum as central banks pondered a way out of QE. Real estate funds suffered their ninth consecutive year of redemptions (-£1.28bn), although the lowest since 2018.
Mixed assets attracted £472m over 2025. The asset class has not had a negative year over the 20 years covered in the chart, and this is the lowest inflows they have received. 2010 to 2017 were the strongest years for MA, peaking at +£21.98bn in 2017, and with average flows of +£17bn over the period. However, flows have subsided subsequently, and the average for the past seven years has been +£4.83bn.
However, it has been the best year for alternatives since 2021, with the asset class recovering from three consecutive years of redemptions to attract £2.59bn. Commodity funds also saw their second consecutive year of inflows (+£754m).
MMFs were the largest money-taker for the year, attracting £22.22bn—almost double the flows for 2024—not too surprising in a year that was characterised by volatile monthly flows (see below), and skittishness over high valuations in hot areas of equity markets.
Chart 5: Asset Class Flows by Month, 2025 (£bn)
Source: LSEG Lipper
Money market funds had positive flows for seven months—enough to take the lead overall. The largest flows were in January (+£6.69bn) and November (+£6.65bn). Market uncertainty combined with the still attractive rates on cash no doubt encouraged investors towards the comfort of safety.
The high redemptions from equity funds were concentrated on two months: July and October.
The global equity rally that began in mid-April continued over the year as US trade deals with key trading partners supported markets. Nevertheless, equity funds saw the largest redemptions in July (-£34.54bn). Most of this is the result of moves within a small number of funds. This was concentrated on Equity US funds, which suffered their worst ever outflows over the month
(-£19.03bn). There were similarly large and concentrated redemptions for Equity Global (-£12.1bn). In October—the second worst month (-£22.62bn)—Equity Global funds were the biggest losers (-£8.29bn), followed by Equity US.
Was this an example of the cold winds of AI scepticism blowing through UK investors earlier than their global peers? Possibly, with valuations in most main equity markets close to or at historically peaks. The case is therefore not difficult to make, and equity flows remained negative between June and November, with a slight uptick into positive territory in December.
Bonds suffered their worst month in April (-£6.9bn), likely impacted by the wide-ranging US tariff announcements early in the month, though rebounded strongly in May, when the sky failed to fall on our heads (+£4.03bn). It’s notable that the asset class had four months of negative flows over the year, all in H1. Paradoxically, April was the strongest month for equity flows (+£6.29bn).
While mixed-assets funds saw positive flows over nine months—as with equities, peaking in April (+£2.67bn)—June redemptions
(-£7.8bn) had a significant net impact on the year.
Trends by Asset Class, Active v Passive
Chart 6: UK Asset Class Flows, Passive and Active Mutual Funds and ETFs, 2025 (£bn)
Source: LSEG Lipper
2024 was characterised by a broad-based rotation from active to passive strategies in both equity (a well embedded trend) and bond fund markets. As can be seen in chart 6, 2025 paints a rather different picture. While passive equity ETFs saw inflows of £1.08bn (and active ETFs +£79m), both equity passive (-£34.92bn) and active (-£25.77bn) suffered major outflows, with passive strategies for once bearing the brunt of this.
While passive bond ETFs attracted £2.35bn (active ETFs: +£448m), their passive mutual fund peers were the biggest losers
(-£5.23bn), as active bond mutual funds attracted £1.81bn. In 2024, passive bond ETFs were a relatively small player. Investors may be attracted on the basis of price, or better tradability. Conversely, in a world of increasing risk, active selection away from more debt-laden issuers may be getting more cut-through.
Chart 7: UK Passive and Active Mutual Funds and ETFs, Relative Net Assets, 2006-2025 (%)
Source: LSEG Lipper
The effect on the mix at the level of total net assets has been an increase of the proportion of passive mutual funds between 2024 and 2025 from 23.79% to 24.39%, with passive ETFs increasing their market share by 3.08% to £89.55%bn. Meanwhile, active mutual funds market share was eroded from 73.1% to 72.06%. The shift to passive will likely have been slowed by redemptions from both equity passive and active funds, and the popularity over the year of MMFs, which is an overwhelmingly actively managed asset class.
In 2006, active mutual funds held 92.6% of assets, passive mutual funds had 6.97%, and ETFs just 0.43%.
Lipper Global Classification
Chart 8: 10 Largest Positive Flows by Lipper Global Classification (£bn)
Source: LSEG Lipper
In 2024, if Equity US wasn’t quite the only game in town, it was certainly the main one. The tables have turned over 2025, with Money Market GBP netting £21.29bn, almost all active money. Mixed asset aggressive funds remain popular, YoY, with Mixed Asset GBP Aggressive – Global taking £12.42bn, again almost entirely active. Mixed Asset GBP Balanced – Global also enters the top 10 by flows (+£3.5bn), with its Conservative peer a little outside at twelfth place (+£1.3bn). The latter two classifications had previously struggled, likely as a combination of disappointing returns following 2022’s underperformance of bonds, and as investors abandoned bond-proxy MA investments for bond funds as yields subsequently expanded, and there was seen to be greater value in the market. That rotation now seems to have unwound.
Bond Global funds have faired well (USD: +£5.24bn; GBP: +£1.96bn), with the bulk of money in both cases being taken by passive funds. Bond Global Short Term remained attractive (+£1.93bn, mainly to active strategies). GBP-denominated short-term funds also took £1bn.
Despite worries over UK finances, investors allocated £1.6bn to Bond GBP Government, albeit with £1.17bn of redemptions from active strategies.
On the equity front, Equity Global Income was the most popular, taking £3.56bn, all and more to active funds. The portfolios of the major money-takers are notably lighter in Mag7 stocks than tends to be the case in their Equity Global peers. Equity Global Small & Mid Cap also netted £1.89bn, mainly active, despite the market still being driven by large caps. Equity Emerging Markets Global attracted £1.45bn (+£841m passive; +£611m active) in what has been a strong year for this market.
However, in a year where equity investors have been tipped to look for developed market equivalents to a richly valued US, the obvious alternative of Equity Europe has attracted a relatively modest £483m.
Outflows by Lipper Global Classification
Chart 9: 10 Largest Negative Flows by Lipper Global Classification (£bn)
Source: LSEG Lipper
Despite a strong year in performance terms, Equity UK continues to haemorrhage assets (-£16.41bn: -£10.12bn passive/-£6.31bn active). While UK pension funds’ asset shift may largely have fed through, wealth managers continue a shift to more global benchmarks, and this is likely presenting an ongoing headwind. Likewise, Equity UK Small & Mid Cap (-£4.82bn) and Equity UK Income (-£4.8bn) continue to see redemptions despite positive performance and the positive flows to their global peers.
Bond Global Corporates GBP sees the second-highest redemptions (-£13.66bn: -£12.19bn passive/-£1.47bn active), with tight spreads likely making them less attractive on a risk-adjusted basis. Similarly, Bond GBP Corporates sees redemptions of £3.54bn.
However, the big contrast with the previous year is with Equity US (-£13.09bn: -£12.51bn passive/-£585m active) and Equity Global (-£9.75bn: -£7.09bn passive/-£2.67m active). UK investors have clearly become wary of richly valued US large caps, and their ballooning weightings in global indices. It’s also interesting that redemptions are primarily from passive strategies. In 2024, it was active money that led in Equity US, so this is not simply the previous year’s euphoria unwinding. Why US active money should be stickier is, however, not altogether clear.
Sustainable Funds
Chart 10: Asset Class Flows, Sustainable v Conventional, FY 2025 (£bn)
Source: LSEG Lipper
Total sustainable net flows for 2025 were -£16.32bn (-£15.54bn ex MMFs), compared to conventional flows of -£18.65bn and -£20.34bn, respectively. This is in stark contrast to the positive flows of previous years: for instance, in 2024 sustainable funds took £15.24bn (£14.92bn ex MMFs), compared to £12.19bn (£1.03bn ex MMFs).
MMFs’ £235m inflows were in the same direction as the £22.8bn for the asset class’s conventional flows, while sustainable real estate netted £58m despite the £1.34bn redemptions for conventional property. Sustainable commodity funds attracted £17m (+£737m conventional).
On the debit side of the ledger, sustainable alternatives shed £29m (+£2.69m conventional), bonds -£110m (-£483 conventional), and mixed assets -£797m (+£948m conventional). It’s therefore of note that sustainable alternatives and mixed assets are seeing outflows as the broader market expands.
Note: Lipper has published a more detailed 2025 review of the UK sustainable fund market here.
Flows by Fund Management Company
Chart 11: Fund Flows by Fund Management Company—Top 10 (£bn)
Source: LSEG Lipper
HSBC was the most successful asset manager in terms of net flows over 2025, attracting £14.57bn. Inflows were broad based, covering bond (+£5.57bn), equity (+£3.75bn), MMF (+£3.52bn), and mixed assets (+£1.64bn).
Vanguard again took second place (+£7.75bn), predominantly to its equity range, where it was the largest money-taker (+£4.13bn). In a year characterised by positive MMF flows, Goldman Sachs took the largest share (+£5bn).
Launches, Closures, and Mergers
Chart 12: Mutual Fund and ETF Share-Class Launches, Mergers and Liquidations, 2020-2025
Source: LSEG Lipper
Over the course of 2025, UK fund promoters launched 1,476 fund share classes, while liquidating 990, and merging 417 others. Launches were ahead of last year, with liquidations and mergers down, so overall there was a net increase of 4.9% in share classes, as opposed to 2024’s contraction. Last year we pondered if the contraction would be ongoing, catalysed by the need to demonstrate value for money, but this seems to have stabilised.
Chart 13: Mutual Fund and ETF Share-Class Launches, Mergers and Liquidations, by Asset Class 2025
Source: LSEG Lipper
There was most activity in the equity space, with 742 launches, 532 liquidations, and 209 mergers. Next comes bonds, with 317 launches, 210 liquidations, and 37 mergers, followed by mixed assets (295, 175, and 151, respectively). Despite the smaller universe, alternatives saw 84 launches, 55 closures, and 17 mergers, while MMFs saw 28, 10, and 2, respectively.
Perhaps unsurprisingly, real estate saw fewer launches (4) than closures (5) and mergers (1).
Methodology
Flows and performance data are calculated from the universe of mutual funds and ETFs that are registered for sale in the UK, with reporting currency in sterling.
