The UK investment management industry reached a new peak of £10 trillion assets under management in 2024, according to the latest figures from the Investment Association.
The 10% year-on-year growth saw the industry bounce back to surpass 2021 levels and reverse 2022’s market-driven dip.
The sector has been boosted by strong equity returns, better economic conditions and an increasing number of assets managed from the UK on behalf of overseas investors.
The Investment Association said 2024 had seen strong retail market growth, with assets managed on behalf of retail investors reaching 28% and surpassing pension funds for the first time.
Pension assets have fallen from a peak of 45% of total AUM in 2018 to 27% in 2024, driven by increasing numbers of defined benefit schemes winding down as well as schemes reaching full funding and transferring their liabilities and assets to insurers.
Meanwhile, assets managed on behalf of overseas clients surpassed 50% for the first time (51%), making up £5.1 trillion of AUM. Overseas client assets have more than doubled over the past decade, growing at a faster rate than UK client assets, which increased around 40% over the same period.
Separately, the Investment Association said indexing strategies are becoming more prominent in the UK, reflecting the demand for lower cost investment options. Indexing strategies reached their highest ever level of 35% of AUM in 2024, after a slight dip in 2023.
While active management still represents roughly two-thirds of assets, index trackers have grown by almost a quarter (24%) over the past decade.
Of the £4.9 trillion of assets managed from the UK that sit in investment funds, almost three quarters (69%) are in funds domiciled overseas. Most of 2024’s investment fund growth came via funds domiciled in Ireland, which now make up over half of overseas fund assets managed from the UK, the figures showed.
Chris Cummings, CEO of the Investment Association, said: “The UK investment management industry has reached record highs over the past year, a testament to firms’ resilience amidst geopolitical and economic uncertainty.
“Industry growth has been supported by the UK’s status as a global centre of excellence for portfolio management as we retain and attract an increasing number of overseas clients. Significant improvements to the regulatory environment, enabling firms to introduce appropriate levels of risk and foster innovation, are helping UK firms to continue to thrive and take important steps towards creating a culture of inclusive investment in the UK.
“Maintaining regulatory and political stability will be essential to sustaining competitiveness and attracting long-term capital.”
Cummings added that the UK government’s recent efforts to boost domestic capital through the Leeds Reforms also “signals a powerful alignment” between government, regulator and industry.
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