The Investment Association (IA) has reported significant interest in index trackers, which saw £1.1 billion in inflows during June 2025, reflecting a strong trend toward passive investing, particularly within equity markets across Europe and North America.
This influx in tracker fund investments highlights a growing preference for algorithm-driven portfolio management, as investors increasingly seek cost-effective, transparent, and rules-based access to global markets. While activity in UK equity trackers has remained relatively subdued, demand for European and North American strategies has surged, indicating a shift in geographic focus amid ongoing geopolitical uncertainties.
The data suggests investors are favoring the stability and efficiency provided by passive strategies. Index trackers present a technologically advanced means of maintaining investment exposure without the emotional volatility often associated with active management, especially in unpredictable market conditions.
In the first half of 2025, despite a challenging first quarter, the overall net inflows reached £2.9 billion, with the second quarter alone contributing £4.8 billion. This rebound emphasizes the resilience of investors. Additionally, mixed asset funds have made a notable comeback, attracting £2.6 billion in the first half of the year—marking their first consistent inflow period since 2021. These funds, often backed by automated asset allocation models, appeal to investors looking to delegate decision-making amid market volatility.
June saw particularly strong interest in funds with a 40-85% equity allocation, indicating that investors are open to risk while seeking diversified, tech-enhanced investment solutions that aim to balance growth with downside protection. As digital platforms and data-driven strategies increasingly influence retail investing, the IA’s findings suggest that UK investors are not only embracing technology in their investment approaches but also in their asset choices.
Miranda Seath, the IA’s Director of Market Insight and Fund Sectors, noted the resurgence of inflows into mixed asset funds reflects an emerging trend of investors returning to ‘investment solutions.’ After experiencing ongoing outflows between 2022 and 2024, this shift suggests a growing confidence in strategies where investment managers actively adjust allocations between equities and bonds.
Seath also pointed out that a persistent home bias exists among investors, and attracting more individuals to the investment landscape could support UK equities in the long run. However, she emphasized that current investors are closely monitoring the UK economy, particularly in light of upcoming measures outlined in the Chancellor’s Autumn Budget, which may include potential tax increases and could impact the broader economic outlook.