Thursday 12 September 2019 12:01 am

Political turbulence hits investment industry as assets under management flatline

Ongoing political and economic uncertainty took a toll on the UK’s investment management industry last year, with assets under management (AUM) remaining stagnant.

Although the UK managed to retain its ranking as the second largest investment management hub in the world – behind the US – the total amount of AUM by Investment Association (IA) members remained unchanged at £7.7 trillion by the end of 2018.

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Despite this flatlining, investment managers in the UK still managed 37 per cent of all assets managed in Europe, according to the IA’s annual survey. Overall, the UK had more assets under management at the end of 2018 than the next three European financial centres (France, Germany, and Switzerland) combined.

“Against economic and political headwinds, the UK investment management industry has been resilient and remains a domestic and international success story,” said IA chief executive Chris Cummings.

Overseas clients accounted for 40 per cent of the total assets managed in the UK in 2018 – unchanged from the year before. European clients accounted for almost 60 per cent of these assets at £1.8 trillion, while North American clients saw the biggest relative increase, rising 11 per cent to £565bn.

Growing appetite for international investment opportunities has been a consistent trend over the past decade, but the proportion of UK-managed equity funds invested overseas remained unchanged last year at 70 per cent – up from 54 per cent ten years ago.

The ethical investment agenda is being “strongly embraced” by the investment management industry, the report said. Just over a quarter (26 per cent) of total AUM were subject to a some form of responsible or sustainable investment criteria.

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“Responsible and sustainable investment and the funding of businesses and infrastructure projects through private markets are key new areas that UK investment managers can excel in,” Cummings said.

“Getting this right will help ensure better outcomes for UK customers and the domestic economy, and bolster our position to compete internationally.”