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Despite US President Donald Trump stepping back from more extreme tariff proposals, investors became more selective in May 2025, leading to a clear reallocation of capital across regions and strategies.
European equities emerged as a key beneficiary, attracting GBP 369 million in inflows, the strongest performance since June 2024.
In contrast, US equity funds recorded just GBP 115 million in net inflows, their worst monthly figure since September 2023, while UK equity funds saw GBP 449 million in outflows.
Technology stocks, especially those linked to AI, semiconductors, and hardware, were the most net bought, with funds favouring individual stock exposure over broad index trades.
Strategically, May also saw a divergence in fund performance. While multi-strategy and quantitative equity funds capitalised on equity dislocations and volatility, fixed income and commodity-focused strategies faced renewed challenges amid concerns over sovereign debt and erratic price movements.
Additionally, long positions in oil gained traction as hedge funds looked to hedge geopolitical risk in the Middle East. As tensions increase, geopolitical tensions could become a strong driver of change for hedge fund strategies.
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