UK Asset Management Industry Reaches Record

The UK asset management industry grew to a record £7.7 trillion, maintaining its standing as the second largest asset management centre in the world, according to the latest figures* published today by the Investment Association (IA), the trade body that represents UK asset managers.

Key 2017 findings*:

£7.7 trillion managed by IA members in the UK – 11% increase from 2016
£9.1 trillion of assets under management (AUM) by wider UK industry – 12% increase
£3.1 trillion managed for overseas clients – up 19% from £2.6 trillion
£1.8 trillion of overseas assets from European investors – up 29% from 2016
100,000 jobs supported by the asset management industry across the UK
One third of the value of UK plc owned by asset managers – c. £920 billion

The Brexit context

The importance of the UK’s financial services sector to the UK and European economy has come into sharp focus as the date for the UK exiting the EU rapidly approaches.

The UK’s status as a preeminent global centre of asset management expertise has seen AUM from overseas clients increase by almost a fifth to £3.1 trillion, over half of which (£1.8 trillion) is from European investors.

In Europe, the UK remains the largest centre of asset management (larger than the next three countries – Germany, France and Switzerland – combined), where it manages 35% of AUM.

Investors are engaging UK based fund managers to invest around the globe. In 2017, 70% of equities managed in the UK were overseas, up from 49% a decade ago. The same theme is evident in fixed income markets where overseas bonds now represent 42% of all fixed income assets – up from a third in 2011.

The asset management industry also makes an important contribution to export earnings, responsible for 6% of UK net service exports, and the value of export receipts has risen seven times in the last 20 years.

Chris Cummings, Chief Executive of the Investment Association said:
“The IA’s latest data reveals that assets managed in the UK for European clients increased by nearly 30% in 2017 to £1.8 trillion, making Europe the largest source of overseas assets for UK asset managers. The clear value the European market brings to the UK asset management industry underlines the urgent need for a Brexit deal to be completed by March 2019 which protects our industry, and more importantly, the savings of millions of people right across Europe.

“The IA’s definitive overview of asset management illustrates that it is an exciting time for our industry. We are playing an increasingly significant role in the UK economy having invested £1.7 trillion, providing vital funding for UK businesses and infrastructure, and supporting 100,000 jobs around the country.”

Supporting the UK economy

Asset management is an indispensable part of the UK economy, providing vital funding for UK businesses and infrastructure. £1.7 trillion was invested in the UK economy across diverse asset classes through asset managers. This includes asset managers’ UK equity holdings, approximately £920 billion in 2017, and worth a third of the FTSE.

UK asset managers are also increasingly funding businesses through private markets with £31 billion invested in direct lending in 2017. The demand for direct lending and infrastructure from pension schemes and insurance companies is becoming more prominent. Infrastructure investment has seen considerable growth.

By the end of 2017, IA members had invested £40 billion in UK infrastructure, a 40% increase from £29 billion the year before. Three quarters of this investment is in economic infrastructure including energy, transport and environmental projects. The remaining 25% is invested in projects which provide a social benefit, such as schools and hospitals.

The number of people employed in asset management has been growing over the last decade. The asset management industry now supports around 100,000 jobs across the UK.

* The Asset Management Survey captures asset management undertaken by Investment Association’s member firms. The figures are stated as at December 2017.

Source: Investment Association

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