Investment management delivers for investors during a tumultuous 2020
Assets under management held by Investment Association (IA) members grew to £9.4 trillion in the UK by the end of 2020, an increase of 11% on the previous year, according to the Investment Management Survey (IMS) the annual assessment of the state of the industry.
Total funds under management (FUM) for UK investors have also seen an 11% increase year on year, reaching £1.4 trillion in 2020. Quick adaptation to home working, a focus on delivering for customers, and crucial interventions from the central banks were all key aspects of the industry’s recovery and resilience through the Covid–19 pandemic.
The UK remains the second largest investment management centre in the world behind the United States, and by far the largest investment management centre in Europe with a market share of 37%. The UK’s share of the European market is larger than the combined total of France, Germany and Switzerland. The UK also remains an attractive hub for overseas investors. By the end of 2020, overseas client assets accounted for 44% of total AUM (equivalent to £4.2 trillion).
The growth in assets managed according to responsible investment criteria is one of the standout developments of 2020. The green agenda continues to rise in prominence and investment managers have committed to support the transition to net zero emissions. 49% of total assets managed by IA member firms apply ESG integration, up from 37% in 2019. The proportion of assets subject to sustainability focused criteria almost doubled in 2020 to 2.6% of total assets.
Retail investor appetite for environmentally conscious funds has been building over recent years but the pandemic brought social concerns to the fore, as net retail sales to responsible investment (RI) funds accelerated through 2020 to reach £11.7 billion, a third of overall sales. FUM in responsible investment funds grew by 60% over 2020, pushed higher by strong sales and new fund launches. The percentage of UK investor FUM in RI funds remains small but growing at 3.9% - up from 2.6% at the beginning of 2020.
March 2020’s market contraction in the equity and bond markets badly hit asset valuations globally and UK investor FUM fell 11% over March alone. A swift recovery followed as central banks took decisive action to calm markets. However, the recovery in UK equity valuations has lagged other major markets, including the US. AUM in UK equities continued to fall in 2020 - down three percentage points from 2019, reaching a record low of 26%, whilst North American equities have grown to account for 23% of equities in 2020. The fall in UK equities also reflects the long-term trend of higher allocation to globally diverse equity and bond strategies. Three quarters of equity assets are now invested overseas compared with just over 50% ten years ago and assets in overseas bonds are 55% of all bond AUM in 2020.
Chris Cummings, Chief Executive of the Investment Association said:
“The investment management industry demonstrated its long termism through the pandemic by supporting the companies it invests in. The swift action of the central banks supported the global economy and the industry rallied to the cause injecting over £22bn into businesses to help them ride out the storm. But the pandemic wasn’t the only story of 2020. We also saw the acceleration towards a greener economy as retail investors placed record funds into responsible and sustainable investments, seeing a new generation embracing investing. With the final transition out of the EU completed, the industry is well-set to build on its world class reputation which has already led to it managing £9.4trn of international clients’ funds.”
The IMS also sets out detail on the key themes from 2020, including: the continued growth in responsible and sustainable investing, the growth in private markets, and how the industry has adapted to the post-Brexit landscape
For further information, please contact:
Katie Martin, Head of Communications: [email protected]
T: +44 (0)20 7269 4655
Clive Booth, Communications Manager: [email protected]
T: +44 7960 149 200
Camilla Esmund, Communications Executive: [email protected]
T: +44 (0)20 7269 4625
IA press office: [email protected]
T: 020 7269 4696
About the Investment Association (IA):
- The IA champions UK investment management, supporting British savers, investors and businesses. Our 270 members manage £9.4 trillion of assets and the investment management industry supports 114,000 jobs across the UK.
- Our mission is to make investment better. Better for clients, so they achieve their financial goals. Better for companies, so they get the capital they need to grow. And better for the economy, so everyone prospers.
- Our purpose is to ensure investment managers are in the best possible position to:
- Build people’s resilience to financial adversity
- Help people achieve their financial aspirations
- Enable people to maintain a decent standard of living as they grow older
- Contribute to economic growth through the efficient allocation of capital.
- The money our members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.
- The UK is the second largest investment management centre in the world, after the US and manages over a third (37%) of all assets managed in Europe.