Our latest industry survey
Today sees the publication of the IMA’s comprehensive annual survey of the UK asset management industry. It is a snapshot at the end of last year, both in figures and from interviews with leading industry figures.
The numbers are big. With just shy of £4 trillion (that’s £4 million million) under management, the UK industry is the world’s second largest after the US. About a third of those assets belong to overseas clients and the management fees make a tidy contribution of some £4 billion a year to the UK balance of payments. It looks after about £1.3 trillion for pension funds at home and abroad, £900 billion of life insurance money, and £800 billion of retail funds.
The industry itself is not large – just 25,000 direct employees in the UK, although a good many more indirectly – reflecting its “agency” business model: client money is held completely separately, with the manager paid an arm’s length fee for the services provided. But the sheer volume of funds it manages, including 38% of listed shares in UK companies and around half of all gilt-edged stock issued by the UK government, make it very significant.
The industry has navigated the crisis well, without facing the scale of problems seen in banking and other sectors. But it is caught up in the backlash. A major challenge is to implement properly a wave of new regulations, mainly from the EU, some of which are not as well joined-up as they should be. Previous reforms have not always produced the hoped-for results, for example the failure of the MiFID Directive to deliver more transparency and lower costs when trading in the capital markets. Even well-intentioned regulation can sometimes have unforeseen consequences, and can risk damaging the long-term needs of end investors.
The second big challenge is how to respond to the needs of both retail and institutional clients, bruised by the last ten years of market upheaval. Increasing innovation in both the retail and institutional markets is a clear sign of this. People need to save more for the long term and the current economic climate is encouraging them to start. The industry is trying to make sure it has the right products for them.
Our survey has continued to develop over the years – this time, for example, we have added a series of questions on the UK institutional market in order to give a fuller picture. I would encourage anybody with an interest in the industry to read it. Enjoy.
Richard Saunders
Chief Executive, IMA
25 July 2011
