Investors withdrew £260 million from UK equity funds in June, reversing nearly all of the previous month’s net buying, amid concerns over ongoing conflict in the Middle East and an uncertain global economic outlook. Data from Calastone, a global fund network, revealed that UK-focused stock funds have experienced cumulative outflows of £356 million in the second quarter, a notable improvement from the £1.8 billion pulled from these funds in the first quarter.

Despite the outflows from UK equities, global equity markets have remained buoyant. Stock indices including the FTSE 100, the S&P 500, and the Nasdaq recorded strong performances in the first half of the year. The FTSE 100 marked its best quarterly run since 2022, rising for six consecutive quarters, while U.S. markets posted their strongest quarterly gains since 2020. These gains were partly supported by a sharp drop in oil prices, with Brent crude falling below pre-conflict levels after a ceasefire agreement between the United States and Iran appeared to hold.

While investors moved away from UK equities, bond funds benefited from a resurgence of interest, receiving net inflows of £1.1 billion in June—their third-highest monthly total on record. The shift towards fixed income securities was driven by a desire for more defensive investment positions amid geopolitical tensions and economic uncertainty. Falling inflationary pressures, in part due to lower oil prices, have eased expectations of further interest rate hikes by central banks, supporting bond prices. The yield on the benchmark 10-year UK government bond declined to 4.79% in June from 4.9% the previous month. European bond yields also fell, though U.S. Treasury yields edged higher amid market speculation that the Federal Reserve may still raise interest rates later this year.

Edward Glyn, head of global markets at Calastone, noted that while investors remain willing to take risks, they are now more selective, favoring balanced portfolios that combine growth with resilience. He highlighted that bond funds offer a compelling mix of high income and potential capital gains should interest rates decrease, encouraging a defensive strategy amid elevated equity valuations and ongoing geopolitical challenges.

In the first half of 2026, bond funds attracted £2.3 billion of net inflows globally, whereas equity funds experienced £2.7 billion of net outflows. Regionally, Asia-Pacific equity funds continued their prolonged slump with £312 million of net selling in June, marking 38 consecutive months of outflows. In contrast, North America-focused equity funds drew £200 million in net inflows, making it the only region to see positive net investment during the period.