Asset management industry demands good Brexit deal

The UK asset management industry grew to a record £7.7 trillion, maintaining its standing as the second largest asset management centre in the world, according to the latest figures published today by the Investment Association (IA), the trade body that represents UK asset managers.

Key 2017 findings:

• £7.7 trillion managed by IA members in the UK – 11% increase from 2016
• £9.1 trillion of assets under management (AUM)  by wider UK industry – 12% increase
• £3.1 trillion managed for overseas clients – up 19% from £2.6 trillion
• £1.8 trillion of overseas assets from European investors – up 29% from 2016
• 100,000 jobs supported by the asset management industry across the UK
• One third of the value of UK plc owned by asset managers – c. £920 billion

The Brexit context

The importance of the UK’s financial services sector to the UK and European economy has come into sharp focus as the date for the UK exiting the EU rapidly approaches.

The UK’s status as a preeminent global centre of asset management expertise has seen AUM from overseas clients increase by almost a fifth to £3.1 trillion, over half of which (£1.8 trillion) is from European investors.

In Europe, the UK remains the largest centre of asset management (larger than the next three countries – Germany, France and Switzerland – combined), where it manages 35% of AUM.

Investors are engaging UK based fund managers to invest around the globe. In 2017, 70% of equities managed in the UK were overseas, up from 49% a decade ago. The same theme is evident in fixed income markets whereoverseas bonds now represent 42% of all fixed income assets – up from a third in 2011.

The asset management industry also makes an important contribution to export earnings, responsible for 6% of UK net service exports, and the value of export receipts has risen seven times in the last 20 years.

Chris Cummings, Chief Executive of the Investment Association said:

“The IA’s latest data reveals that assets managed in the UK for European clients increased by nearly 30% in 2017 to £1.8 trillion, making Europe the largest source of overseas assets for UK asset managers. The clear value the European market brings to the UK asset management industry underlines the urgent need for a Brexit deal to be completed by March 2019 which protects our industry, and more importantly, the savings of millions of people right across Europe.”