The Investment Association has published its annual investment management survey, attached and summary as below
Chapter 2 has an excellent summary of the IA's view on three key themes that will shape the UK industry, including an 2-3 page overview of the evolution of sustainable investing in a more complex operating environment and topical themes/ challenges:
Firms must navigate a shifting environment for sustainable investing as we see diverging political views towards implementation of net zero measures, an accelerating volume and pace of regulation including Sustainable Finance Disclosure Regulation (SFDR) ad Sustainability Disclosure Requirements (SDR), and changing investor demand.
The 2023-2024 Investment Management Survey is published 4 October can be downloaded by visiting the survey page on the Investment Association website. Alongside the extensive data on industry assets under management in the retail and institutional markets, the latest edition of the report provides an overview of key themes shaping the industry.
Alongside the extensive data on industry assets under management in the retail and institutional markets, the latest edition of the report provides an overview of key themes shaping the industry.
The report is structured in six sections covering a very wide range of data points and qualitative observations about the evolution of the UK industry through 2023 and into 2024:
1. UK Investment Management Industry: A Global Centre
2. Three Key Themes that will Shape the UK Industry
3. Trends in Client Assets and Allocation
4. UK Institutional Client Market
5. UK Retail Funds Market
6. Operational and Structural Evolution
Key findings this year include:
- Total UK assets under management (AUM) reached £9.1 trillion in 2023, a 3% increase from the £8.8 trillion reported in 2022.
- The UK continues to be a centre for portfolio management expertise. International clients are approaching half (49%) of all UK managed assets, rising one percentage point over the year.
- Retail clients are the second largest client group accounting for 26.4% of AUM (up from 24.7% in 2022). Pension funds remain the largest client group but fell again as a proportion of the total asset base to 31.4% (down from a peak of 45% in 2018).
- The shift towards more globally diversified assets continued in the equity space in 2023. UK equities as a proportion of all equity holdings fell two percentage points to 20%, marking a ten percentage point fall over the last decade.
- In the UK institutional market, third party assets stood at £3.4 trillion, up from £3.3 trillion in 2022. Pension funds remain the largest client type, accounting for 62% of third party assets while third party insurance client assets rose for the second year in a row, to 18%, reflecting increased demand in the pension buy out market.
- The market value of assets in liability driven investment (LDI) strategies continued to fall in 2023, from a peak of £1.5 trillion in 2021 to £1.1 trillion in 2023.
- Industry headline profitability fell once again to 20% (from 29% five years ago) as revenue continued to fall while costs increased.
- The number of people directly employed by IA members fell 1% to 45,800 over 2023, marking the first fall in industry headcount since the global financial crisis in 2008.
UK funds market
- UK investors' funds under management (FUM) in UK and overseas domiciled funds reached £1.43 trillion by the end of 2023, up 4% from £1.37 trillion in 2022, but still 10% lower than the £1.59 trillion peak in 2021. Our latest data shows a continued recovery through 2024, with FUM reaching £1.50 trillion as of July 2024.
- Net retail sales in 2023 of -£24.3 billion were only a marginal improvement on the -£26.9 billion reported in the previous year. Our latest data indicates some recovery in flows with year to date flows of £3 billion as of July.
- Consumer research commissioned by the IA indicates that just under two fifths (39%) of the UK adult population are active investors in a range of products including direct holdings of investment funds, investment trusts, bonds, shares, stocks & shares ISAs and cryptoassets.
Key industry Themes
In addition to the wealth of data, the report also explores three themes shaping the industry both in the UK and internationally:
- Maintaining the UK's competitiveness in a new economic cycle
- The evolution of sustainable investing in a more complex operating environment
- Supporting innovation and harnessing the benefits of AI and tokenisation
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James Doyle
Director, Green Finance, Investment Management
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