Total investments in the UK are set to near pre-pandemic levels this summer despite a torrid year for global markets amid the coronavirus crisis.
Total assets under management (AUM) by members of the Investment Association (IA) reached a record high of £8.5 trillion at the end of 2019, a 10 per cent increase on the previous year.
This came despite ongoing domestic instability including the UK’s departure from the EU in January 2020.
The IA estimates that even as global markets fell in the face of coronavirus restrictions at the beginning of the year, by mid-2020 total AUM had almost returned to pre-Covid levels.
It cements the UK as Europe’s largest investment management centre, with higher total AUM than France, Germany and Switzerland combined, and behind just the US globally.
Despite an apparent resilience during the pandemic, the UK’s investment management industry has faced significant challenges both economically and operationally as a result of Covid-19.
As a result, the IA has identified a number of lessons to be learned that range from liquidity management to diversity and inclusion.
Chief among the wider challenges the pandemic has presented is defining a clear role for the industry to play in the economic recovery.
“As the UK continues to navigate through the social and economic impacts of the coronavirus, there is an expectation that the financial services industry needs to make a strong contribution to the UK’s economic recovery”, the IA report said. “This includes the investment management industry’s role in recapitalisting listed UK companies.”
At the end of 2019, investment managers had invested £1.6 trillion in the economy, which includes £950bn in UK equities and £450bn in corporate bonds. Since March 2020, over £14bn has been provided to publicly-listed UK companies.
And the IA highlights the importance of investment in infrastructure projects in the face of constrained government finances as a result of coronavirus. Last year, total investments in UK infrastructure by IA member firms rose from £35bn to £45bn.
Chris Cummings, the IA’s chief executive said: “It is a mark of the industry’s resilience and focus on delivering for savers that total industry assets have reached £8.5 trillion, significantly driven by customers from around the world choosing the services of UK investment managers.”