Threats made by President Trump over US designs on Greenland prompted British investors to pull almost £700 million from equity markets as geopolitical turmoil exerted pressure on “fragile investor sentiment”.
Outflows from equity funds rose sharply to £697 million in January, marking the eighth consecutive month of net selling, according to data compiled by Calastone, the global funds network.
It takes the total amount withdrawn from equity funds to £11.3 billion since June, the biggest selling spree since Calastone began compiling the figures.
Outflows from equity funds accelerated sharply on January 19 and continued for the rest
of the month.
UK and European funds bore the brunt of the sell-down, with £694 million pulled from UK funds while those focused on Europe suffered their worst monthly outflows in a year.
The outflow of money came despite the rally in both the FTSE 100 and FTSE 250 indices extending into this year, with the blue-chip index touching fresh highs as a sharp rise in precious metals prices boosted the value of London’s miners.
In contrast, emerging markets, global and North American funds all absorbed new cash last month.
Edward Glyn, head of global markets at Calastone, said the acceleration in withdrawals towards the end of January indicated that it does not “take much to fracture fragile sentiment, especially when stock prices are riding this high”.
Edward Glyn, head of global markets at Calastone
IMPOWER/FUNDFORUM
However, he said the pace of outflows in January was far slower than in the run-up to the budget, when a record flood of selling was prompted by concerns of possible higher pension and investor taxes.
“This indicates that the risk of conflict over Greenland was more of a tail risk in investors’ minds rather than a clear and present danger,” he said.
Bond funds enjoyed a stronger performance, recording net inflows of £459 million, in line with the average of the last six months. New cash was mainly in corporate bond funds, while sovereign bond funds saw outflows.
Money market funds, seen as a safe haven, saw their first outflow since April 2024. However, January is typically a weak month for these cash funds, most likely because Christmas credit card bills are settled, Calastone said.
Outflows from property funds remained subdued, with only £51 million withdrawn, driven by a reduction in selling. The sector saw the pace of outflows slowing to £745 million last year, down from £1.2 billion in 2024 and the lowest rate since 2020.