Geopolitical tensions linked to Greenland triggered renewed outflows from European and UK equity funds in January, according to the latest fund flow index from global funds network Calastone.

Equity funds saw £697 million net outflows in January, extending the run of monthly selling to eight months. European and UK equity funds were hit the hardest, according to the data.

Flows were relatively balanced early in January, shared Calastone, before sentiment weakened after markets reacted to the prospect of US tariffs linked to rising tensions around Greenland. Outflows accelerated from 19 January and continued through to the month-end.

European equity funds suffered their worst month since January 2025, with investors withdrawing £237 million. UK-focused equity funds also saw rapid selling in the second half of the month, ending January with net outflows of £694 million.

Active bonds shine as European fund flows hit records in 2025

Other regional equity sectors were largely unaffected by the Greenland-related developments. Asia-focused equity funds continued to see outflows broadly in line with recent averages, while Japanese equity funds recorded smaller outflows than in previous months. Emerging markets, global and North American equity funds all saw net inflows during January.

Fixed income funds attracted £459 million of net inflows, broadly in line with the average of the past six months, with demand concentrated in corporate bond funds while sovereign bond funds saw outflows.

Mixed asset funds gained £1.05 billion, in line with their long-term monthly average, reflecting their continued role in regular savings plans. Money market funds, however, experienced their first net outflow since April 2024, a pattern Calastone noted is typical for January as households settle post-holiday expenses.

Edward Glyn, head of global markets at Calastone, said: “The pace of outflows in January was far slower than in the run-up to the Budget, where 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. It shows, however, that it doesn’t take much to fracture fragile sentiment, especially when stock prices are riding this high. Investors now have to be more alive to geopolitical factors than in the past and they are titrating their geographical allocations accordingly.”