Money market funds see record inflows as investors seek safety

Money market funds experienced a significant resurgence in popularity last month, with investors shifting capital away from equities amid persistent market uncertainty. UK investors favoured these low-risk instruments to navigate ongoing economic and geopolitical tensions that continue to disrupt financial markets. According to data from Calastone, the funds attracted 417 million pounds of inflows in September, marking their strongest performance since November 2025.

These investment vehicles are designed to preserve capital rather than target aggressive growth, typically holding short-term debt issued by governments, banks and companies. This structure offers investors reduced volatility and yield opportunities that often exceed those provided by high-street banks. Analysts observed this rigorous interest despite major developed and emerging markets delivering robust returns. The FTSE 100 is up 5.1 per cent since January, while the Nasdaq has climbed 13.5 per cent. Key emerging markets have also generated strong returns, with the Kospi rising 57.8 per cent.

Kyle Caldwell, fund and investment editor at Interactive Investor, noted that some investors are keeping a portion of their portfolio in cash-like investments to seek yield while limiting volatility. Others may be using these funds as a temporary home for cash before deploying it into equities over time. This trend coincides with the approach of Chancellor John Healey’s maiden Autumn Budget. Edward Glyn, head of global markets at Calastone, suggested that speculation about higher taxes is driving outflows from equities as investors take profits. He described money market funds as a safe haven, allowing returns with minimal risk, while noting that investors are demanding more compensation for taking risk.