The IA said the growth from £5.7trn in 2015 to £6.9trn last year secured the UK’s place as the second largest global asset market behind the US, and meant it accounted for 37% of all assets managed in Europe.
It added last year’s “exceptional growth” was driven by an increase in the value of overseas assets, which benefited from the weakening of sterling following the Brexit vote in June.
Domestic assets have now grown on average by 8% a year for the last decade, the IA said.
Four times UK economy
The research, now in its 15th year, also found £2.6trn is managed in the UK on behalf of overseas investors, up from £2.2trn in 2015. More than 50% of this (£1.4trn) is managed for non-UK European clients.
Elsewhere, the value of investments by UK investors in retail funds reached a record £1trn by the end of 2016. However, the IA noted retail flows were significantly lower than in recent years as net investment by UK investors fell to £4.7bn.
Overall the UK asset management industry is 373% the size of the UK’s GDP. This is significantly higher than other European countries where the average value of AUM is close to 100% of local GDP, according to the IA.
Supporting the economy
The report also highlighted the role played by the asset management industry in the UK economy through investment in UK companies, property, infrastructure, as well as its impact on the wealth of individuals’ pensions and investments, and the earnings brought to the UK from overseas clients.
It found:
93,500 people are currently employed in activities related either directly or indirectly to asset management.
37,700 are directly employed by asset management firms, equivalent to of the population of a medium-sized town in the UK.
At the end of 2016, £840bn was invested via asset managers in UK shares, £500bn in sterling corporate bonds and £160bn in UK commercial property.
£29bn was invested in infrastructure. Three quarters of this (73%) was directed to economic projects, such as solar and wind farms and the remaining quarter (27%) to social infrastructure such as hospitals and social housing projects.
Chris Cummings, chief executive at the IA, said: “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.
“As an industry, we are responsible for looking after the pensions and investments for millions of savers. We act as the stewards of the UK economy and we work hard to ensure good corporate governance. We recognise the responsibility we carry and the trust invested in us by the investing public.”
