UK assets under management hits record £6.9 trillion

The popularity with investors of infrastructure as a key asset class looks set to sharpen as the trade body today reveals total industry assets hit record highs last year.

The Investment Association report also highlighted Scotland's 'key role' in the sector. Picture: Matt Morton/PA Wire

Chris Cummings, chief executive of the Investment Association (IA), said: “This year’s report also sees an increasing focus on infrastructure investment, supporting the delivery of essential social housing, healthcare and environmental projects at the heart of communities right across the UK.”

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The IA said £29 billion was invested in UK infrastructure in 2016, and that “three quarter of this (73 per cent) was directed to economic projects, such as solar and wind farms and the remaining quarter (27 per cent) to social infrastructure such as hospitals and social housing projects”.

It came as the investment industry trade body said total industry assets managed in the UK jumped 20 per cent last year to a record £6.9 trillion, attributing the rise largely to the fall in sterling since the Brexit vote.

In the IA’s first annual asset management survey since the EU referendum, it said: “The exceptional growth witnessed in 2016 largely reflects an increase in the value of overseas assets, which benefited from the weakening of sterling versus all other major currencies following the Brexit referendum in June 2016.”

The report also hailed Scotland’s “key role” in the UK cementing its position as a global asset management hub, although on two metrics the performance was slightly down north of the Border.

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The IA said 9 per cent of assets under management in the UK were managed in Scotland (£620bn) in 2016, compared with 10 per cent the previous year. And almost 25 per cent of funds run by UK managers are represented by managers headquartered in Scotland – down from 28 per cent in 2015.

More positively, numbers directly employed by asset management firms in Scotland rose last year to 7,500 from 7,350.

“Scotland, and particularly Edinburgh, continues to play an important role within the national asset management industry,” the report said.

Cummings added: “The asset management industry has again experienced a year of strong growth confirming the UK’s place at the forefront of a competitive global market.”

The IA said £2.6tn is managed in the UK on behalf of overseas investors, up from £2.2tn in 2015. More than 50 per cent of this is managed for non‑UK European clients.

On the implications of Brexit, the IA chief said the continued success of the UK “will inevitably depend on the extent to which these relationships can continue unhindered, not least where assets are managed in the UK for funds domiciled in the EU”.

The asset management sector is almost four times the size of the UK economy. The equities, bonds and foreign exchange markets are bigger than the rest of the EU combined, while forex is bigger than the US/Japan combined.

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