The UK is one of the largest asset management markets in the world. It is Europe’s leading centre for fund management, and already attracts significant overseas funds.
Asset management in the UK
The UK’s open asset management market is growing
The UK is one of the most open markets for asset management, and has had 7 successive years of growth. Total funds under management increased to a record 6.9 trillion GBP at the end of 2015.
Overseas investors own about 40% of medium sized fund management firms. Asset managers with overseas parent organisations manage 57% of assets managed in the UK according to the Investment Association.[source: Investment Association]
The UK is an important location for fund domicile; with around 12% of European assets under management domiciled in the UK at the end of 2014. The largest asset holders according to City UK are:
- Luxembourg (27%)
- Ireland (15%)
- France (14%)
- Germany (14%)
Companies based in the UK are well placed to capture a growing share of business from developing economies, with high potential for growth.
Support services in front, middle and back office are state-of-the-art, offering significant cost efficiencies. We also benefit from a central time zone.
“Green finance”: how the UK government is supporting the market
“Green Finance” refers to investment in low carbon projects and infrastructure. The UK is a global financial centre and the London Stock Exchange hosts 48 green bonds, representing around 10 billion GBP in 7 currencies.
Clean energy investments in the UK have more than doubled since 2010, rising from 10.8 billion USD in 2010 to over 25 billion USD in 2016.
The UK government is encouraging private investment markets around the world to invest in the UK’s low carbon projects and infrastructure. The City of London’s Green Finance Initiative was established in 2016 was established in 2016 to promote the UK as a global centre for green finance. Through Innovate UK, the UK Government has supported the LENDERS project to improve estimations of homeowners’ energy costs when calculating mortgage affordability.
A wide range of fund types and clients
UK fund management organisations manage various types of funds, from life insurance and pension schemes to unit or investment trusts.
Client types include:
- institutional, which accounted for 81% of assets managed in the UK in 2015, 41% of which were pension funds
- retail where the UK managed a total of 1063 billion GBP by end 2014, that’s an increase of 32% in 2 years
- private clients with 705 billion GBP managed the end of 2014
London is a global centre for private equity and property funds and has an 18% share of the hedge fund market. Since 2005, we have also attracted 16% of global Sovereign Wealth Funds.
An attractive business environment with regional strengths
London is central to the UK’s strong international position. Respondents to The Banker’s Global Asset Management Survey have voted it the most attractive global location for relocating or expanding asset management operations, ahead of Hong Kong, Singapore and New York.
Edinburgh, Manchester, Cardiff and Birmingham are also well known as bases for companies with expertise in fund management.
Currently, the asset management sector in the UK employs over 90,000.
Government support for asset management businesses in the UK
The UK has one of the most competitive tax regimes in the world for both funds and asset managers. Funds that are domiciled in the UK can take advantage of around 120 double taxation agreements, more than in any other country.
The UK government has the ambition for us to lead the world in investment management and has demonstrated a strong commitment to the sector. In 2013, it implemented the Investment Management Strategy, which is focused on improving the UK’s taxation regime, improving the regulatory environment, reducing fund authorisation times, and representing the UK globally through effective marketing.
The government also has up to 50 billion GBP available to support finance and insurance for supplies from within the UK to buyers outside the UK. This support takes the form of guarantees, insurance and loans issued by its export credit agency, UK Export Finance.