UK asset management industry surges to £6.9 trillion

When investment bankers, who already have established trust and relationships with clients, refer these clients to the private bank, it lays the foundation for long-term, valuable relationships

New figures from the Investment Association cite ‘exceptional’ growth experienced by the UK asset management industry – and despite Brexit. Matthew Hardeman reports

The total assets under management in the UK surged by 20 per cent in 2016 to a record £6.9 trillion, according to the Investment Association (IA)’s annual Asset Management Survey. The boost contrasts with an average annual rise of 8 per cent over the past decade, putting the UK first in Europe, and only behind the US globally as center for asset management.

The annual survey the IA’s first since the referendum to leave the EU and follows the news last week that London had retained it premier slot worldwide in the Z/Yen index of global financial centers.

However the Investment Association noted that the ‘exceptional growth’ witnessed in 2016 was largely due to a weak pound post-Brexit – when sterling declined against all major currencies for months in the aftermath of the vote. According to the survey, £2.6 trillion worth of assets are now managed in the UK behalf of overseas investors, more than half of which is for clients in Europe (non-UK). In total, 36 per cent of assets managed in Europe were managed from the UK.

‘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,’ said chief executive Chris Cummings. ‘Our members help finance UK companies to power the wheels of innovation and increase productivity. As investors, we take an ongoing interest in the long term strategic health of the businesses we invest in and hold the management of those firms to account.’

The survey shows that 93,500 people are currently employed in activities related to asset management, while 37,700 are directly employed by asset managers – equivalent to the population of Rutland (make of that what you will). Meanwhile the services provided by UK asset managers to overseas investors has contributed an average of 6 per cent to total net service exports from the UK during the past decade. The latest figures put the UK’s total assets under management at almost four times the size of GDP.

As of the end of 2016, £840 billion was invested via asset managers in UK shares, £500 billion of which was dedicated to sterling corporate bonds, with £160 billion going to UK commercial property.

Whether the UK will remains home to these new assets (and their management) once sterling begins to appreciate – as it has of late – remains to be seen. But the numbers serve as a further reminder that the City remains a global forerunner for the financial services industry, despite mounting regulation and a climate of political and economic uncertainty in the wake of Brexit.