Tuesday 18 September 2012
IMA: INVESTORS FAVOURED FUNDS OVER DEPOSIT ACCOUNTS FOLLOWING THE FINANCIAL CRISIS
UK investors turned towards funds significantly following the 2008 financial crisis, as net flows into traditional bank and building society deposits fell sharply, the Investment Management Association’s 10th Annual Survey has revealed. This is in line with investment in funds increasing when interest rates fall, as savers look for capital growth and income unavailable from cash investments. Falling levels of trust in banks could also have contributed to the decrease in cash deposits.
Annual net inflows into bank and building society deposits and funds both before and after the crisis were:
|2007||£91.8 billion||£11.2 billion|
|2008||£59.2 billion||£4.8 billion|
|2009||£13.0 billion||£29.8 billion|
|2010||£31.3 billion||£29.7 billion|
|2011||£40.6 billion||£18.1 billion (£13.7bn of which was in the 1st half)|
There was a gradual, if partial, recovery of net inflows into banks and building societies by 2011 after their 2009 low, coupled with a decrease in net retail investment into funds after the first half of 2011. The first half of 2012 has seen just over £8 billion in fund sales. These lower inflows, with lower net inflows into equity funds in particular, could be attributed in part to increased investor anxiety over the Eurozone situation.
Jonathan Lipkin, Associate Director, Pensions and Research, at the IMA, commented:
“We might have expected the intense financial crisis that developed in the autumn of 2008 to undermine investor confidence across all financial products. Instead, we saw a marked increase in investment into funds. In an environment where mistrust of financial services providers is high, this represents a vote of confidence in the UK fund management industry. From 20% of GDP in the late 1990s, funds now account for assets equivalent to just under 40% of UK GDP.”
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- The IMA Annual Survey focuses on asset management activity in the UK on behalf of domestic and overseas clients.
- The results are based on the questionnaire responses of 85 IMA members, who between them manage £3.7 trillion in this country (90% of total assets managed in the UK by IMA members)
- In-depth interviews were also conducted with 30 senior figures from 20 IMA member firms.
About the IMA:
- The IMA is the trade body for the UK's £4.2 trillion asset management industry (retail and institutional) which is one of the world's leading investment management centres.
- Our role is to represent the interests of the asset management industry to government and regulators both in the UK and internationally.
- The money our members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.
* Figures for deposit accounts are net acquisition of currency and deposits by the UK household sector (including non-profit institutions serving households). Figures include interest credited to accounts. Source: ONS.
** Figures for funds are net retail sales of UK authorised investment funds. Source: IMA.