The UK investment management industry surpassed £9trn in assets under management (AUM) during 2023, up from £8.8trn in 2022, according Investment Association (IA) figures released today (1 August).
The 3% rise in AUM came after a 12% plummet in 2022. However, growth remains relatively slow compared with the period following the global financial crisis in 2008 to 2021, where AUM grew by an average of 9% each year, and funds under management (FUM) grew by 11%. Currently, FUM sit at £1.43trn.
UK-listed companies make up nearly a fifth of the equity AUM, at £780bn, while investment in debt and equity in UK companies grew to £1.18trn in 2023. However, over the past decade, allocation to UK equities has fallen 10%. In comparison, North American companies account for 35% of the share of equity assets, a figure which has near doubled in the past 10 years.
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Chris Cummings, CEO of the IA, said: “Investment is the powerhouse of the economy that provides capital to the businesses and infrastructure projects which drive growth. Through these investments and the long-term returns they generate, our industry helps people in the UK and around the world achieve their goals and enjoy financial security into retirement.
“Today’s figures demonstrate an industry which has proven resilient in the face of a challenging economic backdrop, with assets under management growing to £9.1trn in 2023, £1.18trn of which is invested in the UK companies through equities and bonds. However, it is critical that government, industry and the regulator continue to work together closely to boost growth and innovation, and ensure the UK investment management industry retains its leading position.”
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By 2023, nearly half of all UK assets were managed for overseas clients, including £2.5trn in Europe and £925bn in North America. While in total this grew by 7% in 2023, UK assets are still lagging behind their 2021 peak in Europe of £2.7trn.
Retail investors have also accounted for a widening portion of AUM, now comprising 36.4%. In 2020, retail investors made up 20%.
“In 2020, the Bank of England cut the base rate to 0.1% to help kick start the economy and in November 2022, successful vaccine trials were announced and market performance rebounded strongly. This environment was attractive to retail investors, many of whom had more disposable income and time to spend on investing,” the report stated.
“Through 2022 and 2023, the proportion of AUM managed on behalf of retail investors has remained steady. This is in spite of rising inflation, higher interest rates and the market shock in 2022 caused by the Russia/Ukraine war.”
This story was written by our sister title, Portfolio Adviser
