The UK Investment Association’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.
“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,” said the Investment Association (IA).
The IA represents the UK asset management industry, with its 240 member firms employing 93,500 people across the UK.
IA member firms 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.
The survey showed £2.6 trillion is managed in the UK on behalf of overseas investors.
More than 50% of this is managed for non-UK European clients “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.
In other European countries, the average value of assets under management is close to 100% of local GDP.
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.
Investment Association CEO Chris Cummings said: “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 survey’s main findings included:
- 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 — and three quarters of this was directed to economic projects, such as solar and wind farms and the remaining quarter to social infrastructure such as hospitals and social housing projects