UK investors sold more out of equity funds in 2025 than in any year on record. Calastone, which tracks the UK funds network’s actual buy and sell orders rather than survey opinion, found £6.71 billion in net outflows from UK-domiciled equity funds over the year – more than double the previous record, set in 2016 around the Brexit referendum. From June to December, investors sold for seven consecutive months, moving a combined £10.57 billion into what Calastone’s Edward Glyn described as the perceived safety of cash. It’s a striking number, and a useful one, because it turns something abstract – market anxiety – into a measurable pattern of decisions. The harder question is whether those decisions actually helped.
Why the instinct to act feels so strong
Part of the answer sits in well-established behavioural research. Tversky and Kahneman’s work on loss aversion found that, on average, a loss is felt roughly twice as intensely as an equivalent gain feels good – so a portfolio falling 10% registers, emotionally, as considerably worse than a 10% rise feels rewarding. That asymmetry is well replicated across decades of research, even if the exact size varies by study and by what’s actually at stake. It explains a lot about why watching a portfolio value drop can create pressure to do something, anything, even when the calm response would be to leave it alone.
The same instinct works in reverse, too
In March 2025, UK investors added a net £1.77 billion to North American equity funds – the strongest month for the category since March 2024 and one of the largest on record, with total buy and sell activity 47% above the prior year’s average. That buying happened just before markets fell sharply in April 2025, when new US tariff announcements triggered a global sell-off. The pattern isn’t really about fear or confidence individually – it’s the same instinct, chasing whichever direction feels safest at the time, which tends to mean buying after prices have already risen and selling after they’ve already fallen.
What this costs, in practice
Morningstar’s annual “Mind the Gap” research compares the returns funds actually produce with the returns the average investor in those funds actually received, based on when money moved in and out. Its 2026 edition, covering the ten years to the end of 2025, found investors earned around 1.2 percentage points a year less than the funds themselves returned – a gap attributed to buying and selling at less favourable moments than simply staying invested throughout. Some researchers have challenged how large that gap really is once the numbers are looked at differently, but the underlying pattern – that market-timing decisions tend to subtract value rather than add it – is well established across a wide range of studies, not just this one.
What tends to help instead
Diversifying across asset classes and geographies doesn’t stop a portfolio moving with the market, but it does mean a single event rarely affects everything held at once, which softens the pressure to react to any one piece of news. Reviewing a portfolio on a set schedule, rather than every time a headline feels significant, achieves something similar – it separates genuine reasons to change course from noise, and it means decisions get made with a clear head rather than mid-scroll through an unsettling news cycle.
For anyone still adding to investments regularly, a period of lower prices isn’t only a source of anxiety; it also means each contribution buys more than it did before, which is worth remembering when the instinct is to pause contributions until things “settle down.” Stopping regular investing during a downturn, ironically, tends to do the opposite of what the Calastone figures above show many people actually did – it locks in missing the recovery entirely, rather than simply weathering the dip.
We’ve written separately about what past periods of volatility have taught us about investor behaviour, which looks at this from a more historical angle and is worth reading alongside this.
When selling actually is the right call
Sometimes it is – a change in your own circumstances, timeframe or goals, not a reaction to a headline. The distinction that actually matters is what’s driving the decision, which is usually much easier to see with someone outside the situation asking the question with you.
Talk to us before you act on it
We work with clients across Poole, Bournemouth and the wider Dorset area to keep a portfolio’s strategy tied to their own goals and timeframe, rather than to whatever markets happen to be doing on a given week. If recent volatility has you weighing a change, get in touch and we’re happy to have a no-obligation conversation before you act on it.
This article is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only. All information is correct at the time of writing (September 2026) and is subject to change in the future.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit your overall attitude to risk and financial circumstances.