- According to the Investment Association, investors continue to shun UK stocks in favor of global equities
- Despite the pandemic, retail fund sales reached £30.8bn last year
- IA members’ wealth in the UK increased by 11% to £9.4trn by the end of 2020
According to a new report, investor appetite for UK stock holding funds continues to decline as they favor global equities and bonds.
UK shares tumbled despite a great year for the fund industry and analysts flagged them as an opportunity in the COVID recovery.
British investors’ wealth in UK stocks fell to a record low of 26 per cent by the end of 2020, according to new data from the trade body, the Investment Association (IA).
The decline is partly down to pandemic uncertainty and the effects of Brexit, but also reflects a long-term trend of higher allocations to global equity and bond strategies.
Retail fund sales reach £30.8bn despite pandemic, but investors continue to look overseas
Three-quarters of equity assets are now invested abroad, compared to only 50 percent a decade ago, while assets in foreign bonds account for 55 percent of all bond AUMs in 2020.
Last year, net inflows into the IA Global sector reached £6.1 billion, more than three times that of the next best-selling region, North America.
Despite the dire effects of the pandemic, the UK fund industry has enjoyed one of its best years, according to IA’s latest Investment Management Survey.
Retail fund sales rose to £30.8 billion, making it the second biggest year on record for net sales after 2017.
Despite the steep fall in March 2020, total investor funds under management (FUM) reached a record £1.44 trillion by the end of the year, up nine percent from £1.32 trillion in 2019.
Elsewhere, the demand for green investment has been an ‘extraordinary growth’ over the past year. Responsible Investment Fund net retail sales reached £11.7 billion, accounting for 38 percent of total net retail sales.
“Investor appetite for environmentally conscious funds has been increasing in recent years, but the pandemic has brought to the fore societal concerns,” the IA said.
The UK remains the second largest investment management center in the world after the US and a leader in Europe with a market share of 37 per cent – larger than the combined total of France, Germany and Switzerland.
AUM held by IA members rose 11 percent to £9.4 trillion in the UK by the end of 2020, helped by decisive action by central banks.
‘The investment management industry has demonstrated its long-termism through the pandemic by supporting the companies it has invested in. Quick action from central banks supported the global economy and the industry rallied to the cause, injecting more than £22bn into businesses to help them exit. Hurricane,’ said IA chief executive Chris Cummings.
The UK remains an attractive center for foreign investment.
As of the end of 2020, assets from overseas clients accounted for 44 per cent of total AUM, equivalent to £4.2trillion.
With the final transition from the EU complete, the industry is well poised to build on its world-class reputation, with it already managing £9.4trn of international clients’ funds,’ said Cummings.