UK investment management industry suffers biggest asset drop in 20 years

Assets under management (AUM) for the UK investment management industry dropped by the largest annual fall for 20 years.

It fell to £8.8trn in 2022 – a 12% drop year-on-year – according to The Investment Association (IA) Investment Management Survey 2022-23.

The IA described the past 12 months as “turbulent” due to political and economic uncertainty stemming from the war in Ukraine and rising inflation which fed into a cost-of-living crisis.

However, despite the drop in AUM for the UK investment management industry, the IA said it remained an “international success story”.

The UK investment management industry saw £4.6trn managed for UK retail and institutional investors, and £4.2trn (48% of assets managed in the UK) managed on behalf of overseas investors.

IA market insights manager Sarah Shehabi added that where there have been moments of market volatility, there has been a “speedy recovery”.

Also, UK equities has “held up quite well” especially when in comparison to global equities.

Responsible investment funds were not “immune to the challenging conditions of 2022” as these funds saw £5.4bn of inflows compared with £15.9bn in 2021.

Still, the IA said: “The evolution of sustainable and responsible investment will be a key theme shaping the future of the UK investment management industry.”

Total investments in the UK reached £1.4trn, across equities, bonds, infrastructure and property investment.

IA chief executive Chris Cummings added: “2022 saw a perfect storm of unprecedented events which impacted UK households and the economy.

“The investment management industry, like many others, was affected and we saw a significant fall in assets under management, reflecting the challenging economic environment.

“Despite the turbulent conditions, investment managers have first and foremost, continued to provide for their clients, helping households across the UK meet their long-term financial goals.

“The UK investment management industry also remains a global success story, with our products and services highly valued by customers around the world.

“However, these difficult conditions are set to continue for the foreseeable future, and it is crucial that our industry works together with government and regulators, so the UK retains its position as a leading centre for investment management.

“Ultimately, a competitive, forward-looking regulatory framework that supports innovation will enable our industry to deliver the best solutions to our customers and the UK economy.”

Despite the fall in AUM for the UK investment management industry, direct employment increased by 3% year-on-year.

Approximate 46,200 people are directly employed by investment management firms.