UK investment management industry retains global position against economic and political headwinds
Thursday 12 September 2019
Investment management remains one of the UK’s global success stories, with assets under management standing at £7.7 trillion in 2018, in spite of a year of economic and political uncertainty as the UK prepares to leave the EU. This represents an increase of over 150% (£4.7tn) compared to a decade ago, according to the Investment Association’s (IA) Investment Management Survey, the largest annual study on the state of the industry.
The UK investment management industry has experienced a decade of sustained global growth, maintaining its position as the second largest investment management hub in the world following the US, with more assets under management than the next three European centres combined (France, Germany, and Switzerland).
In the context of Brexit and rising regional trade tensions, the IA’s Survey emphasises the importance of maintaining a global focus and the fostering of innovation, particularly as technological change accelerates. Openness to talent is also key, with the industry making a significant contribution to UK employment figures by supporting 115,000 jobs. 39,500 people were directly employed within investment management firms, up 4% on 2017.
Sustainability is a critical global issue on which investment managers are playing their part. Last year, just over a quarter of total assets under management were invested using a responsible investment approach. Almost all of those firms which are investing responsibly were integrating ESG (Environment, Social and Governance) factors in their investment processes.
Chris Cummings, Chief Executive of the Investment Association said:
“Against economic and political headwinds, the UK investment management industry has been resilient and remains a domestic and international success story. Investment managers invest £1.6 trillion in the UK economy, funding businesses, infrastructure projects and creating jobs across the country.
“Our ability to seize global opportunities has seen the industry enjoy a decade of robust growth, with an increasing number of savers from around the world choosing to use the services of a UK investment manager. Responsible and sustainable investment and the funding of businesses and infrastructure projects through private markets are key new areas that UK investment managers can excel in. Getting this right will help ensure better outcomes for UK customers and the domestic economy, and bolster our position to compete internationally.”
The industry serves clients from around the world with 40% (£3.1tn) of UK managed assets from overseas clients in 2018. Almost 60% of these assets (£1.8trn) came from savers in Europe, while assets managed on behalf of North American clients saw the biggest relative increase at 11% from £510 billion in 2017, to £565 billion in 2018.
Appetite for global investment opportunities is also on the rise, with savers increasingly asking UK based fund managers to invest their money around the globe. Last year, 70% (£1.1 trillion) of UK managed equity funds were invested overseas compared to 54% a decade ago and unchanged from 2017. The bond market has also seen considerable increases in overseas allocation, increasing to 49% (£1.3 trillion) in 2018 compared to 42% (£1.0 trillion) in 2017.
Investment managers are putting savers‘ money to work by investing in UK businesses and infrastructure. By the end of 2018, investment managers were responsible for investing £1.6 trillion into the economy, including £850 billion into UK equities and a further £30 billion lent directly to businesses.
The industry also plays an important role in funding UK infrastructure with £35 billion invested in 2018, a slight decrease on 2017 (£40bn). Three quarters of this was invested in economic infrastructure including energy, transport and environment projects. The remaining 25% funded projects that bring a social benefit, such as schools and hospitals.
Notes to Editors:
- The Investment Management Survey captures investment management undertaken by Investment Association member firms. The figures are stated as at December 2018.
- ESG figures based on GSIA definitions.
Please see the full report here.
Please see our 'Pocket Guide to Investment Management' here.
For further information, please contact:
Ben Rathe, Senior Communications Manager: [email protected]
T +44 (0)20 7831 0898
David Parton, Communications Executive: [email protected]
T: +44 (0)20 7269 4625
IA press office: [email protected]
About the Investment Association (IA):
- The IA champions UK investment management, supporting British savers, investors and businesses. Our 250 members manage £7.7 trillion of assets and the investment management industry supports 100,000 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 35% of all assets managed in Europe.