INVESTMENT MANAGEMENT IN THE UK 2019-2020

INVESTMENT MANAGEMENT IN THE UK 2019-2020

The Investment Association Annual Survey

September 2020

CONTENT ENQUIRIES

Sarah Shehabi, +44 (0)20 7831 0898

CONTRIBUTORS

Sarah Shehabi Ruth Meade Miranda Seath Jonathan Lipkin Richard Hale

The Investment Association (IA) Camomile Court, 23 Camomile Street, London, EC3A 7LL @InvAssoc September 2020

? The IA (2020). All rights reserved. No reproduction without permission of the IA. 2

INVESTMENT MANAGEMENT SURVEY 2019-20 | CONTENTS

CONTENTS

Index of Charts, Figures and Tables

5

About the Survey

8

Survey Foreword

10

Executive Summary

12

1. UK INVESTMENT MANAGEMENT INDUSTRY: A GLOBAL CENTRE 14

Role of investment management

15

Size of UK industry

16

Scotland as a major centre

18

Scale of wider industry

18

UK investment management in European and global context

19

Overseas client market

20

Services to overseas funds

21

Importance to UK service exports

21

2. LESSONS FROM 2020 AND CHALLENGES AHEAD

22

Operational lessons

24

1: The fundamental importance of risk management

24

2: Resilience and the necessity of investing further in technology

25

3: The growing significance of the diversity and inclusion agenda

27

Wider challenges and opportunities

30

1: Defining a clear role for industry in the economic recovery

30

Income and the role of the dividend

32

2: Delivering value for customers in a difficult economic environment

33

Liquidity and widening sources of return

33

Time for a new fund vehicle to access illiquids?

34

3: Setting the agenda for responsible and sustainable investment

35

Responsible investment delivery

37

Sizing the market for responsible investment

37

4: Enhancing UK international standing in the context of Brexit

39

3. TRENDS IN CLIENT ASSETS AND ALLOCATION

42

Client types

43

Historic evolution of client assets

44

Segregated vs. Pooled

45

Asset allocation

45

Growth of private markets

46

Detailed asset allocation

47

Equity by region

47

Fixed income by region

48

Growth of indexing market

49

ETF market

50

Investment in the UK economy

52

Investment in UK infrastructure

53

3

THE INVESTMENT ASSOCIATION

4. UK INSTITUTIONAL CLIENT MARKET

55

Market overview

56

Client breakdown

56

Evolution of pension market

57

Institutional client behaviour through Covid-19

58

Sizing the market

59

The impact of Covid-19 on the DC pensions sector

60

Trends in the third party institutional market

64

Mandate breakdown

64

Investment trends within specialist mandates

66

Active vs indexing

68

Segregated vs pooled

69

5. RETAIL FUND MARKET

70

UK investor funds under management

72

UK investor FUM by asset class

73

Covid-19 and changing patterns of retail fund sales

73

Comparing the pattern of retail sales with previous crises

79

UK equities ? the erosion of home bias

80

Impact of the Brexit referendum on net retail sales

80

Comparatively weak FTSE All-Share total returns

81

The profile of companies listed on the FTSE

82

Increasing interest in index tracking funds

83

Responsible and sustainable investment

86

UK investors and overseas domiciled funds

87

Overseas investors in UK domiciled funds

89

Sales by distribution channel

89

Sales to tax wrappers

90

Investor average holding periods

92

European domiciled funds

92

6. OPERATIONAL AND STRUCTURAL ISSUES

94

Revenue and costs

95

Employment in the investment management industry

96

Direct employment

97

Distribution of staff by activity

97

Industry concentration

99

Boutiques

101

Asset manager ownership

102

4

INVESTMENT MANAGEMENT SURVEY 2019-20 | INDEX OF CHARTS, FIGURES AND TABLES

INDEX OF CHARTS, FIGURES AND TABLES

CHARTS

Chart 1: Total assets under management in the UK and in UK funds (2004-2019)

16

Chart 2: UK-managed assets by UK regional headquarters (June 2009-2019)

18

Chart 3: Proportion of assets managed for UK and Overseas Funds (2015-2019)

21

Chart 4: Export earnings of fund managers and contribution to services exports (1997-2018)

21

Chart 5: Proportion of assets under management by responsible investment category

38

Chart 6: Assets managed in the UK by client type 2019

43

Chart 7: Proportion of assets managed in the UK by client type (2009-2019)

44

Chart 8: Assets managed in the UK by client type (2009-2019)

44

Chart 9: Segregated versus pooled investment (2009-2019)

45

Chart 10: Overall asset allocation of UK-managed assets (2009-2019)

45

Chart 11: Global assets under management in private markets (2009-2019)

46

Chart 12: Number of companies listed on UK markets (1975-2019)

47

Chart 13: UK-managed equities by region (2009-2019)

48

Chart 14: Allocation of UK-managed fixed income by type and region (2011-2019)

48

Chart 15: Indexing strategies as proportion of total UK assets under management (2009-2019)

49

Chart 16: ETF Assets under management by region of domicile (2009-2019)

50

Chart 17: Drivers of 2019 growth in ETFs

50

Chart 18: Total assets by European domicile (2009 ? 2019)

51

Chart 19: Proportion of European assets under management by asset class (2009-2019)

51

Chart 20: UK institutional market by client type

56

Chart 21: UK institutional market by client type (2011-2019)

57

Chart 22: Pension participation for private sector jobs

60

Chart 23: DC members by scheme type

60

Chart 24: Third party UK institutional client market by client type

64

Chart 25: UK third party institutional client mandates including LDI

64

Chart 26: Notional value of LDI (2011-2019)

65

Chart 27: UK third party institutional client mandates: Multi-asset vs. specialist

65

Chart 28: UK third party institutional client mandates: Multi-asset vs. specialist (2011-2019)

65

Chart 29: DC asset allocation, 30 years prior to retirement and at retirement

66

Chart 30: Specialist mandate breakdown by asset class (2011-2019)

66

Chart 31: Specialist mandate breakdown by asset class

67

Chart 32: UK DB pension fund asset allocation (1996-2019)

67

Chart 33: Specialist mandate breakdown by asset class among UK pension funds

68

Chart 34: Active and index third party mandates by client type (sample-adjusted)

68

Chart 35: Segregated and pooled mandates by institutional client type

69

Chart 36: Segregated and pooled mandates among third party pension funds

69

Chart 37: Total industry funds under management (2004- June 2020)

72

Chart 38: Drivers of industry growth (1980 to 2020 June)

72

Chart 39: FUM by asset class (2004-2020 June)

73

Chart 40: UK Investor FUM by asset/fund sector

73

Chart 41: Monthly total net retail sales ? 2019 to June 2020

74

5

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download