The UK’s assets management industry excelled globally despite falling in value to £8.8 trillion in 2022, showed data from the Investment Association’s (IA).
The Investment Management Survey added that the UK investment industry managed £4.6 trillion for UK and international investors. Overseas investors added £4.2 trillion, making up 48% of UK-managed assets, showcasing quality. Of this, £2.4 trillion (56%) served European clients (excluding the UK), with £845 billion for North American clients and £680 billion for Asian clients.
The survey noted “an unusual correlation between global equities and bonds” during a period of political and economic instability and a cost-of-living crisis.
While institutional clients, particularly pension funds, continue to dominate the industry, retail customers now hold nearly a quarter (24.7%) of assets under management, up from 22% in 2021 and 20% in 2020. According to the IA, this shift, worth £2.2 trillion, results from different asset exposure and increased retail participation post covid.
The UK’s gilt market turbulence from September to October posed unique challenges for UK pension scheme investments and broader financial stability, leading to a 28% YoY decline in LDI strategies in 2022.
Responsible investment funds also witnessed inflows slowing to £5.4 billion from £15.9 billion in 2021. The IA suggested that the future of the UK investment management industry will be influenced by sustainable and responsible investment.
Total UK investments reached £1.4 trillion, covering equities, bonds, infrastructure and property. However, the trend of divestment from UK equities continued, with £12 billion withdrawn in 2022, double the previous year’s outflow.
Despite the decrease in assets under management, the number of people directly employed by investment management firms in the UK increased by 3% YoY, totaling approximately 46,200.
Chris Cummings, chief executive, IA, said: “It is crucial that our industry works together with government and regulators, so the UK retains its position as a leading centre for investment management.”
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