It was a strong start to the year, but markets — and UK retail wealth management assets — were eventually dragged down by mounting uncertainty. UK indices performed strongly in the first three months of 2025, buoyed by investors rotating out of US equities and favouring the FTSE 100’s exposure to energy, banking and defensive stocks. A weaker pound provided further support, while the prospect of interest rate cuts lifted sentiment overall.
Strong performances from energy giants such as BP and Shell, alongside robust bank earnings, provided additional impetus. Together, these dynamics helped the FTSE 100 notch up its best start to a year in over two decades, even as global markets grappled with significant turbulence. UK markets wobbled following Trump’s steel tariff announcement in early March, but the FTSE 100 still closed the quarter up 5%. In marked contrast, US indices fell by 5% over the same period.
Retail wealth assets slipped by 3.5% in March (and by just 1% since December 2024), falling back below the £800bn mark to £797bn. More insidious, however, has been the damage to consumer and business sentiment. Quarterly gross flows rose to their highest level on Finscape’s records as investors scrambled to exit risk assets, but net flows fell sharply to just £1.9bn for the quarter — although, thankfully, they remained in positive territory. All eyes will be on Q2 and whether the ISA season is able to counter growing uncertainty.