UK investors pulled a staggering £1.2 billion from fixed income funds in April, the fastest pace of bond outflows since the early pandemic panic of April 2020, according to new data from global funds network Calastone.
The sell-off came as President Trump’s April 2 “Liberation Day” tariff announcement sparked global market volatility and raised fears of an economic slowdown, triggering speculation that central banks — including the Bank of England — may need to cut interest rates in response.
“The turmoil in US bond markets has pressured yields around the world,” said Edward Glyn, head of global markets at Calastone. “There are concerns about government finances if the global economy slows as much as predicted.”
It was the second consecutive month of strong outflows from bond funds, following £700 million of redemptions in March. The shift reflects growing unease among investors, who are scrambling to raise cash to meet margin calls and brace for further market swings.
While bond funds suffered, investors flocked to equities — particularly North American stocks — as markets began to price in a potential softening of Trump’s trade policies.
Net inflows into North American equity funds hit £1.5 billion, with momentum building from April 8, shortly after speculation began that Trump might walk back some of the harsher tariff measures. Global equity funds, which are heavily weighted toward the US, also attracted £1.5 billion in inflows.
The S&P 500 has now recovered nearly all of its losses since April 2, trading just 0.5% below pre-tariff levels.
UK equities, while still in outflow territory, showed signs of stabilisation, with net redemptions slowing to £521 million — the lowest since July 2023, outside of months impacted by tax-related trading distortions.
The market volatility triggered by Trump’s tariffs has also had a chilling effect on global dealmaking. In the US, M&A deal value halved month-on-month to $249.4 billion, with April marking the lowest number of transactions since May 2009, according to Dealogic.
Boards reportedly delayed public listings and acquisitions as they waited for clarity on the implications of new trade barriers.
Globally, however, M&A was up 19% year-on-year to $1.2 trillion in the first four months of 2025, with the UK emerging as a top target. Deals involving UK companies totalled $52.2 billion, making it the third most attractive M&A destination behind the US and China.
Larry Fink, CEO of BlackRock, said his firm had “tactically allocated more capital back to the UK,” arguing that many UK stocks — especially banks — were “undervalued” due to “unwarranted negativity.”
“The new administration is tackling hard issues,” Fink told The Times. “So many of the UK stock discounts were too deep. We added to our positions across the board.”
With the Bank of England expected to cut rates to 4.25% on Thursday, and Trump’s tariffs introducing both risk and opportunity, UK markets are at the centre of an unfolding global realignment — and investors are reshuffling portfolios in real time to adapt.
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UK investors dump bonds at fastest rate since 2020 amid Trump tariff turmoil and rate cut fears
