UK Funds Reach Record £6.2 Trillion

Terry Flanagan

UK asset managers were responsible for a record £6.2 trillion of funds at the end of last year and was the fastest growing domicile in Europe according to TheCityUK, which lobbies on behalf of the country’s financial services industry.

The Fund Management 2014 report said that in 2013 the UK fund management sector had its fifth consecutive year of growth, increasing 14% from 2012, due to both inflows and strong investment returns. Overseas clients contributed a third of the funds managed, around £2.2 trillion, making the UK the leading global location for management of funds on behalf of foreign clients according to the study.

TheCityUK estimated that assets rose by 5% in the first half of 2014, with the increase for the full year expected to be above 9%.

“The sector recovered quickly from the fall experienced at the outset of the economic downturn and is now nearly 50% above the pre-crisis peak,” added TheCityUK.

The UK had the fastest growth in Europe for domicile of funds according to the report with a 10.9% increase in assets last year, followed by Luxembourg at 9.7% and Ireland at 9.5%. In 2014 the UK government abolished a fund-specific stamp duty reserve tax that was seen as a major deterrent to domiciling funds in the country.

Chris Cummings, chief executive of TheCityUK, said in the report: “As the leading global centre for cross-border financial services, London and the wider UK are well positioned to capture a growing share of business from international markets which offer the greatest potential for growth.”

The report said Asian countries and other emerging markets are looking more at opportunities to invest in European products and domiciles.

In June last year TheCityUK visited Beijing and held discussions with the Asset Management Association of China, the Insurance Asset Management Association and some of China’s largest asset management firms.

Pension funds’ assets increased by 8% last year to £1.8 trillion while the ‘other institutions’ which includes corporations, local authorities accounted for £1,098bn of assets, up 18% from £930bn in 2012.

The report said the UK, and London in particular, is an important centre in the management of sovereign wealth funds assets.

SWFs including the Kuwait Investment Authority, Brunei Investment Agency, Abu Dhabi Investment Authority and Temasek/General Investment Corporation of Singapore have local representative offices in London. In addition the International Forum of Sovereign Wealth Funds, a group of 26 funds led by China, Russia and the Gulf States, has moved its secretariat to London.

The UK has received one-sixth of global SWFs’ direct investment since 2005.

“Investments into UK infrastructure have been particularly prominent,” added the report. “SWFs have holdings of UK utility assets such as China Investment Corporation and Abu Dhabi Investment Authority’s investments in Kemble Water which owns Thames Water.”

Featured image via Dollar Photo Club

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