UK cements its position as global asset management hub

Thursday 14 September 2017

UK cements its position as global asset management hub

• Total industry assets managed in the UK have grown 20% since 2016 to a record high of £6.9 trillion
• UK remains the second biggest asset management centre worldwide after the US
• £2.6 trillion is managed in the UK on behalf of overseas investors. 50% of this, is for non-UK European clients (£1.4 trillion)
• Industry directs significant investment into the UK economy, including £29 billion into social and economic infrastructure projects
• 93,500 people are employed in activities related either directly or in-directly to asset management

The IA’s first annual Asset Management Survey following the UK’s decision to leave the EU reveals assets under management in the UK increased by 20% in 2016 to a record £6.9 trillion (£5.7trn in 2015).

On average, assets under management have grown by 8% per year in the last 10 years. The exceptional growth witnessed in 2016 largely reflects an increase in the value of overseas assets, which benefited from the weakening of sterling versus all other major currencies following the Brexit referendum in June.

£2.6 trillion is managed in the UK on behalf of overseas investors (£2.2 trillion in 2015). Over 50% of this is managed for non-UK European clients (£1.4 trillion) further cementing the UK’s position as the largest asset management centre in Europe and the second biggest global asset management centre after the US.

Now in its 15th year, the survey shows the UK asset management industry is 373% the size of the UK’s GDP. At almost 4 times the size of the UK economy, the significance of asset management to the UK is clear when compared to other European countries, where the average value of assets under management is close to100% of local GDP.

The importance of the industry to the UK economy is illustrated though the investment they direct towards UK companies, property and infrastructure, the impact they have on the wealth of individuals as they manage their pensions and investments, and the earnings asset managers bring to the UK from overseas clients.

Chris Cummings, IA CEO, comments:
"The asset management industry has again experienced a year of strong growth confirming the UK's place at the forefront of a competitive global market. As an industry, we are responsible for looking after the pensions and investments for millions of savers. We act as the stewards of the UK economy and we work hard to ensure good corporate governance. We recognise the responsibility we carry and the trust invested in us by the investing public.

"Our members help finance UK companies to power the wheels of innovation and increase productivity. As investors, we take an on-going interest in the long term strategic health of the businesses we invest in and hold the management of those firms to account.This year's report also sees an increasing focus on infrastructure investment, supporting the delivery of essential social housing, healthcare and environmental projects at the heart of communities right across the UK."

The UK’s investment management industry plays a vital role in supporting the economy, through job creation & employment and investment in businesses and infrastructure.

• 93,500 people are currently employed in activities related either directly or indirectly to asset management.
• 37,700 are directly employed by asset management firms, equivalent to of the population of a medium-sized town in the UK.
• At the end of 2016, £840 billion was invested via asset managers in UK shares, £500 billion in sterling corporate bonds and £160 billion in UK commercial property.
• £29 billion was invested in infrastructure. Three quarters of this (73%) was directed to economic projects, such as solar and wind farms and the remaining quarter (27%) to social infrastructure such as hospitals and social housing projects.

The value of investments by UK investors in retail funds reached a record £1 trillion by the end of 2016. Retail flows were significantly lower than in recent years as net investment by UK investors fell to £4.7 billion. The preference for outcome-focused funds which has been prevalent in recent years, continued with inflows of £8.7 billion during 2016. Equity and property funds in comparison saw outflows of £8 billion and £2 billion respectively, most of which occurred in the weeks directly after the referendum in June.

The introduction of automatic enrolment in the UK has led to millions of new pension savers and pension funds remain the industry’s largest client type, at 44% of assets, up from 34% a decade ago.

Notes to editors
Please click here for the full Asset Management Survey report: https://www.theinvestmentassociation.org/assets/fi...

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Linsey White
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Helen Ayres
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About the Investment Association:

• The IA champions UK asset management, supporting British savers, investors and businesses. Our 240 members manage £6.9 trillion of assets and employ 93,500 people across the UK
• Our members manage the pensions of 75% of UK households, provide 60% of capital market financing for UK businesses and fund 40% of initial public offerings of shares.
• 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 37% of all assets managed in Europe.