Fund Management 2009, according to International Financial Services London
Conventional assets under management of the global fund management industry fell 19 per cent in 2008, to $61.6tr. Pension assets accounted for $24tr of the total, with $18.9tr invested in mutual funds and $18.7tr in insurance funds. Together with alternative assets (sovereign wealth funds, hedge funds, private equity funds and exchange traded funds) and funds of wealthy individuals, assets of the global fund management industry totaled around $90tr at the end of 2008, a fall of 17 per cent on the previous year.
The decline in 2008 followed five successive years of growth during which assets under management more then doubled. Falls on equity markets, poor investment performance, reduced inflow of new funds, and investor redemptions, all contributed to the fall in assets in 2008. The decline reported in US dollars was also exacerbated by the strengthening of the US dollar during the year. Despite the losses incurred on some investments, fund management has been much less affected by the financial crisis than the banking sector. The economic downturn may however have a longer-term effect on the fund management industry in prompting more cautious investment strategies in the coming years.
The US remained by far the biggest source of funds, accounting for over a half of conventional assets under management in 2008 or over $30tr. The UK was the second largest centre in the world and by far the largest in Europe with around nine per cent of the global total.
UK assets under management fell 12 per cent in 2008 to £3.7tr. This follows average growth of eight per cent per year between 2002 and 2007. These figures represent a conservative estimate as they do not take into account significant funds managed in the UK for which there are no precise data such as funds managed on behalf of sovereign wealth funds as well as private client funds managed, for example, by family offices. London is central to the UK’s strong international position. Edinburgh and Glasgow are also important international centres for fund management.
The UK fund management sector has a strong international orientation reflected in the: institutional presence of a broad mix of UK and foreign firms; investment of over a quarter of institutional clients' portfolios in overseas securities; and management on behalf of overseas clients of funds totalling over £1.2tr.
Fund management accounted for 0.65 per cent of UK GDP in 2008 and provided employment for over 50,000 people. Net exports of UK fund management reached a record £4.1bn in 2008. Fund management margins fell from 32 per cent to 23 per cent in 2008, following six consecutive years of growth.
Read: Fund Management 2009
IFSL is an independent, not-for-profit membership organisation with 40 years’ experience of promoting the UK-based financial services industry throughout the world. For more information, go to www.ifsl.org.uk.
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