Returns on investor risk appetite: where are investors investing their capital?

According to the most recent industry data, investors favored tech, passive funds, and North American stocks in April following several months of caution

According to the most recent industry data, investors are shifting away from defensive assets like money market funds and toward equities, especially those listed in the US, suggesting that stock market confidence is returning.

The Investment Association (IA), a trade association, reported that monthly inflows increased to 1.5 billion in April from 1.3 billion in March.

Over the course of the month, equity outflows considerably decreased as global stocks recovered, indicating a greater willingness to take on risk and the capacity to look past persistent geopolitical uncertainty.

In terms of US dollars, the MSCI World Index returned 9.6% in April, the highest monthly gain since 2020.

Watch the entire video here: In March, equity funds reported outflows of £1.3 billion; in April, those outflows were about half that amount, at £689 million.

With inflows of 1.7 billion and outflows of 2.4 billion, respectively, investors preferred equity index trackers over their actively managed equity fund counterparts.

Do US stocks make sense to invest in?

North American stocks took the lead at the sector level, drawing in 860 million, the most since April 2025.

The key question, according to Miranda Seath, director of market insight and fund sectors at the IA, is whether this momentum spreads or if geopolitical uncertainty keeps risk appetite reasonably restrained.

Strong earnings from a number of major tech companies in recent weeks, including Alphabet (NASDAQ: GOOGL), Meta (NASDAQ: META), Amazon (NASDAQ: AMZN), and Nvidia (NASDAQ: NVDA), all exceeded expectations, according to the trade association. This was probably helped by ongoing investment in artificial intelligence (AI).

The IA Technology and Technology Innovation sector saw 96 million inflows, its first in seven months, which highlighted this trend.

It's not just technology: according to Bloomberg, 84% of the 485 SandP 500 companies that released Q1 earnings exceeded analyst projections.

Regional equity fund sectors from the UK, global emerging markets, Asia, and Europe, on the other hand, all reported net outflows, with losses of 673 million, 477 million, 399 million, and 244 million, respectively.

Investing during periods of instability.

Money market funds, which are frequently utilized by investors as a short-term refuge when markets appear uncertain, saw their first withdrawal since August 2025, with 755 million dollars leaving these more cautious approaches. Money market funds saw record inflows in the preceding month.

In April, the short-term money market had the lowest sales.

This was especially striking, according to Seath. Given the degree of market uncertainty, it makes sense that investors have been keeping money in short-term cash-like assets for a large portion of the previous year.

"After a robust month of North American equity inflows, the fact that money is now starting to move is a positive indication that investors are beginning to feel more confident in the investment outlook, particularly for the US.

In a similar vein, the IA Targeted Absolute Return sector experienced outflows of 114 million, reversing three months of inflows.

Bond funds also saw a return to inflows of 466 million, with Mixed Bond being the best-selling fixed income category with 373 million, followed by Sterling Corporate Bonds with 85 million and Sterling High Yield with somewhat smaller inflows of 79 million. While government bonds saw additional withdrawals, with 147 million redeemed in April, UK Gilts brought in 67 million.