LONDON (22 October 2026) – U.K. active fund investors appear to have become increasingly unwilling to pay a premium for the promise of market-beating returns, new analysis of U.K. fund flows from ISS Market Intelligence (ISS MI) reveals.
In a sign of how price sensitive investors have become, ISS MI’s data show that over the past decade, investors have pulled billions of pounds out of funds with the highest fees over the past decade – even where those funds have outperformed their peers.
U.K. investors withdrew £1.9bn from funds in the fourth quartile for fees (most expensive) and first quartile for performance (best performing) in the three years to July 2026.
By comparison, investors simultaneously poured £14.1bn into active funds that were first quartile for fees (cheapest) and first quartile for performance (best).
Three-year net flows – August 2023 – July 2026
| 1st quartile performance (highest) | 2nd quartile performance (middle) | 3rd quartile performance (lower) | 4th quartile performance (lowest) | |
| 1st quartile fee (cheapest) | £14.1bn | £2.6bn | -£9.3bn | -£8.5bn |
| 2nd quartile fee (middle) | £4.8bn | -£3.4bn | -£1.4bn | -£3.8bn |
| 3rd quartile fee (expensive) | £3.8bn | -£5bn | -£5.2bn | -£12.1bn |
| 4th quartile fee (most expensive) | -£1.9bn | -£3.3bn | -£7.5bn | -£9.3bn |
Three-year net flows – August 2013 -July 2016
| 1st quartile performance (highest) | 2nd quartile performance (middle) | 3rd quartile performance (lower) | 4th quartile performance (lowest) | |
| 1st quartile fee (cheapest) | £6.5bn | £3.4bn | £4.6bn | £3.1bn |
| 2nd quartile fee (middle) | £4.2bn | £3.4bn | £3.7bn | £2.3bn |
| 3rd quartile fee (expensive) | £2.8bn | £1.2bn | £1.7bn | £235m |
| 4th quartile fee (most expensive) | £7.9bn | £751m | £3.4bn | £1.1bn |
Investors were generally more willing to pay a premium for performance a decade ago. Between July 2014 and July 2016, the most expensive top performers (fourth quartile fee, first for performance) attracted net inflows of £7.9bn, compared with £6.5bn for the cheapest top performers (first quartile for fees and performance).
The data suggest price has become just as important as performance – if not more – to investors. That trend is even clearer when share of overall assets under management (AUM) is considered.
Jinesh Shah, associate director at ISS MI, said: “For years, the best fund managers were able to command premium fees, supported by strong performance to keep investors loyal. That may no longer be the case. Investors appear to have become much more price sensitive, which is evidenced by how much money has flowed into cheaper active funds over the past decade. This may be at the expense of higher-priced rivals, even where they have a really strong track record.”
Shah believes the trend has been accelerated not only by the increasing popularity of passive investments but also by the rapid adoption of model portfolio services (MPS).
Shah added: “The growth of passive investing appears to have increased active investors’ focus on price. The rapid adoption of MPS means that a relatively small number of fund selectors have an outsized influence on portfolios. Also, if a fund more is expensive than its peers, selectors may have a hard time justifying its inclusion in investors’ portfolios. Every basis point matters now.”
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Editor’s Note
The analysis covers active mutual funds domiciled in the UK, Ireland and Luxembourg, using clean share classes only. These are share classes with no embedded distribution fees, or those designated “Clean” or “RDR” in the Investment Association (IA) classification list. Hedged share classes are excluded.Fee and performance quartiles are calculated relative to other share classes in the same IA sector, using three-year total return and stated total fee. “The most expensive top performers” are first quartile for performance and fourth quartile for fees. “The cheapest top performers” are first quartile for both.
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