Spanning the trading hours of all the world's major financial centers, the UK is the world's biggest asset management center outside the US, benefitting from a large and diverse pool of talent and significant numbers of domestic and international investors. Based on assets under management, the UK is bigger than the next three largest European countries combined. The UK has created a favorable environment for investment on the back of its commitment to the sector, close industry collaboration and encouragement of innovation.
What UK Offers:
The United Kingdom is the largest center for Asset management after the US. The UK has USD 8.5 trillion worth Assets under management. Pioneers of sustainable and responsible investing - a key future trend for global asset managers. over a third of assets under management are managed for overseas investors making it an international market in its true essence. It is by far the largest European center, with 38% of all European assets managed in the UK - including 85% of all European hedge fund assets. Equities increase as a proportion of total assets from 36% to 38% in the UK in 2019.
The UK pioneers sustainable and responsible investment (SRI), a key future trend for global asset managers. In 2019 the global asset management market increased at a compound annual growth rate (CAGR) of 6.5% since 2015. This is forecast to grow to $145.4tn by 2025, which almost doubles the 2016 figure. Asset management industry is under pressure, due to margin squeeze, an ever increasing regulatory burden, macro-economic and political change, such as Brexit, and disruptive business models, such as ‘robo-advice’. The expectations of clients in this environment change quickly and place even greater pressure on the industry to respond to their evolving needs.
Key Market Trends
Growth in ESG Category is Driving the UK to Top Spot, Globally
The top drivers of environmental, social, and governance (ESG) decision making across all issuers and the majority of the investors are financial returns and tax incentives. Among issuers, the UK and Canada buck this trend, particularly among those with turnover exceeding USD 10 billion in Europe. In the United Kingdom, 65.1% issuers disclosed that they have ESG in place. Company policies/strategies/ESG goals are also important factors for issuers, whereas regulation remains a key driver for asset managers. Disclosure of ESG strategy and policy is an important factor nowadays. Additionally, the UK topped in ESG strategy, globally, with 92.9% penetration.
UK Asset and Wealth Management Deal Dynamics is Driving the Market
As pressure on fees, costs and traditional sources of revenue intensifies, merger and acquisition (M&A) may help business to break free from the margin squeeze. Yet, with client expectations rising and acquisition multiples still high, deal planning, targeting, and integration have to be spot on. Deal activity during 2018 has been fueled by AWM firms looking to build competitive scale, expand product ranges through both vertical integrations, and by acquiring specialist capabilities. This includes investing in digital technologies, as firms look to remain ahead of the curve or to access new routes to market. While 2019 has plenty of uncertainty, the dynamics of the sector continue to prove attractive and expect deal volumes to remain at the level seen last year. The growth within the UK and global asset and wealth management (AWM) remains strong. Yet, margins are being squeezed, owing to increasing research, reporting, and technology investment costs and the challenge of justifying and sustaining fee levels. For active managers, the pressures are heightened by the growing competition from passives and newer low-fee products, like smart beta, along with performance focused active management charging models. Additionally, this is a market where merger and acquisition may continue to offer valuable synergies and economies of scale.
The UK’s largets investment managers are moving away from the traditional asset classes as the top three product trends of 2020 showed preferences for alternatives, multi-asset and responsible investment products. Multi-asset funds accounted for 37 per cent of net retail sales in the UK till early 2020 and 53 percent of net retail sales for the same time period. increased demand across most alternative asset classes, with a particular focus on infrastructure, alternative credit, and traditional private equity, largely driven by institutional investors and pension funds.
The UK asset management market is highly competitive, with the presence of major international players. The market studied presents opportunities for growth during the forecast period, which is expected to further drive the market competition. With multiple domestic players holding significant shares, the market studied is competitive.
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Table of Contents
1.2 Study Assumptions
1.3 Scope of the Study
4.2 Market Drivers
4.3 Market Restraints
4.4 Technological Innovations
4.5 Industry policies and Government Regulations
4.6 Insights on Various Asset Management Industry Trends in UK
4.6.1 Insights on Responsible Investment Instruments in UK
4.6.2 Insights on AuM between Segregated Mandates and Pooled Investments
4.6.3 ETF Markets And Their Resilience During Market Turmoil
4.6.4 Insights on Location wise Assets Managed within UK by UK based asset managers
4.6.5 Insights on Location wise Assets Managed Overseas by UK based asset managers
4.7 Insights on Fee Structure, Operating Cost of UK Asset Management Industry And Their Importance in UK Economy
4.8 Porters 5 Force Analysis
4.8.1 Threat of New Entrants
4.8.2 Bargaining Power of Buyers/Consumers
4.8.3 Bargaining Power of Suppliers
4.8.4 Threat of Substitute Products
4.8.5 Intensity of Competitive Rivalry
4.9 Impact of Covid-19 on UK Asset management Market
5.1.2 Fixed Income
5.1.5 Others (liability Driven Investment(LDI) Strategies, etc)
5.2 By Client Type
5.2.2 Private Clients
5.2.3 Institutional Investors
126.96.36.199 Pension Funds
188.8.131.52 Insurance Companies
184.108.40.206 Public Sector
220.127.116.11 Corporate Clients
18.104.22.168 Other Institutional Clients
6.1.1 Legal and General Investment Management
6.1.2 Insight Investment Management (Global) Ltd
6.1.3 Schroder Investment Management Ltd
6.1.4 Aviva Investors
6.1.5 M&G Investments Ltd
6.1.6 UBS Asset Management Ltd
6.1.7 BlackRock Investment Management (UK) Ltd
6.1.8 Aberdeen Standard Investments
6.1.9 State Street Global Advisors UK Ltd
6.1.10 J.P. Morgan Asset Management
A selection of companies mentioned in this report includes:
- Legal and General Investment Management
- Insight Investment Management (Global) Ltd
- Schroder Investment Management Ltd
- Aviva Investors
- M&G Investments Ltd
- UBS Asset Management Ltd
- BlackRock Investment Management (UK) Ltd
- Aberdeen Standard Investments
- State Street Global Advisors UK Ltd
- J.P. Morgan Asset Management