UK fund managers brush off Brexit with big asset jump

Britain is preparing for the exit from the EU. Picture: PA Wire
Britain is preparing for the exit from the EU. Picture: PA Wire
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UK fund managers’ assets under management surged to a record £8.1 trillion in 2016, according to a report out today from TheCityUK, the trade body for the financial services and professional services sector.

The performance was up 17.4 per cent on the previous year, which TheCityUK said was partly driven by a rise in the value of overseas assets, benefiting from the weakening of sterling versus other currencies immediately following the Brexit referendum in June 2016.

The organisation’s latest UK Fund Management report reveals that more than one third (37 per cent) of funds under management in the UK – a record £2.6tn – are run on behalf of overseas clients, making the UK the leading global centre on this measure.

On a wider yardstick of all assets managed, the UK is the third largest international fund management centre after the US and Japan.

The shot in the arm for the financial services industry comes a day after the new headquarters of the largest active fund managers in the UK and one of the biggest employers in Scotland was officially opened by The Princess Royal.

Her Royal Highness was accompanied by the Right Honourable Lord Lieutenant Frank Ross and hosted at 6 St Andrew Square in Edinburgh by Standard Life Aberdeen joint chief executives, Keith Skeoch and Martin Gilbert.

Despite the record performance in 2016, the latest year for which statistics are available, Anjalika Bardalai, chief economist and head of research at TheCityUK, gave warning that the UK asset management industry could not afford to rest on its laurels.

“The UK fund management industry continues to be a world leader at managing overseas assets. However, technological advancements and increasing competition from emerging centres such as Hong Kong and Singapore mean that UK fund managers cannot be complacent,” Bardalai said.

“The UK government’s renewal of its Investment Management Strategy in 2017 was a positive step. However, to maintain London and the UK as a global centre for asset management, it is vital that an ambitious and pragmatic Brexit deal is secured.”

She added that failure to do so would “only strengthen existing centres in the US and Japan as well as rising competitors in Asia”.

Today’s report also highlights the strong net exports by UK fund managers, which totalled £6.2bn in 2016 and helped offset Britain’s large trade deficit in goods.

Overall, UK-based fund managers employing 52,000 at sites across the UK including the City of London, Edinburgh, Liverpool, Bristol and Aberdeen, generated £3.3bn of overall UK economic output in the year.

Institutional clients account for 79 per cent of UK funds under management, with the rest accounted for by retail and private clients.