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IMA member firms managed GBP3trn of assets in 2008

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Assets managed in the UK by Investment Management Association member firms totalled GBP3trn in 2008, down from GBP3.4trn the previous year.

Assets managed in the UK by Investment Management Association member firms totalled GBP3trn in 2008, down from GBP3.4trn the previous year.

Of the GBP3trn, GBP1trn or 31 per cent is managed on behalf of overseas clients, GBP362bn is in UK domiciled funds (Oeics and unit trusts) and GBP500bn is in offshore funds.

The proportion of the UK stock market held by IMA firms was 43 per cent in 2008, compared with 44 per cent the previous year.

The revenue earned by UK-based asset management firms totalled GBP9.4bn in 2008, down from GBP10.2bn in 2007.

The IMA says sharp market falls in the fourth quarter of 2008 are likely to have a substantial impact on the overall shape of the industry in 2009, including on staff levels, fund launches and broader product development activity. Although there has been a certain amount of firm-level M&A activity in the last year, the asset management industry remains unconcentrated and not readily consolidated.

The combination of the credit crisis and poor equity market returns over the last decade is provoking discussion about how products can be aligned with investor interests. But the IMA survey highlights differing views in the industry about the role "absolute return" strategies can play.

Many senior asset managers interviewed believe the structure of the banking industry is in need of change, with a greater separation of commercial from investment banking, but there were mixed views about whether that should come about as a result of regulatory action or whether market forces would in any event drive the industry in that direction.

Firms recognised the failings in shareholder engagement with banks in the run-up to the credit crisis.  While they accept that there is a need for improvement, interviewees pointed out the limitations as to what can be achieved from outside the boardroom.

The UK, and London in particular, is still generally viewed favourably. However, interviewees expressed caution about the outlook for regulation and tax. While the industry has welcomed recent changes to the UK fund tax regime, firms have criticised the increasing lack of certainty over broader tax policy.

Richard Sunders, chief executive at the IMA, says: "It has been a challenging year for the industry and while asset managers are weathering the storm, there will be a number of lessons to learn. At the product level, firms are reflecting on the strategies they use and the products that clients seek. At a macro level, the banking industry needs to undergo radical reform and that will affect our firms as investors and users of the market. Our industry will also look to engage more actively in the future, but it has to be recognised that there are limitations to what we alone can achieve.
 
‘Overall, the UK can still be considered a favourable location for asset management as long as the tax regime remains stable and predictable, and the regulatory environment for investment management is not adversely impacted by attempts to deal with what was in essence a banking crisis."

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