Britain’s fund management assets rise in 2021, slowdown seen

FUND managers in Britain posted a 6 per cent rise in assets under management to £10 trillion (S$15.5 trillion) last year, but a slowdown is likely, the Investment Association (IA) said on Tuesday (Sep 27).

The 2021 growth rate was below the 11 per cent compound average annual increase seen in the last 10 years, according to an IA survey.

“While 2021 was a positive year, we now face a very different operating environment,” IA chief executive officer Chris Cummings said in the report, pointing to the war in Ukraine. “Rising interest rates bring the spectre of recession and weaken the outlook for asset growth.”

Sterling fell to record lows against the dollar this week as fears mounted over the government’s recently announced fiscal plan, unleashing calls for an emergency Bank of England rate hike to restore confidence.

Assets managed within funds open to a range of investors reached £4.1 trillion last year, with almost two-thirds sitting in funds registered overseas, mainly in Ireland and Luxembourg.

So far, the European Union has not materially restricted delegation, the mechanism which allows overseas asset managers to run funds based in the bloc, but the volume of business, which brings in export earnings to Britain, highlights what’s at stake if EU-UK relations broke down completely over issues like post-Brexit Northern Ireland.

SEE ALSO

Sterling likely to fall further; impact on Singapore firms, S-Reits mitigated by hedging, limited exposure

God save the pound?

DECODING ASIA

Navigate Asia in
a new global order

Get the insights delivered to your inbox.

Nearly half of assets in the survey are now subject to environmental, social and governance criteria, and assets applying exclusions reached 28 per cent, from 25 per cent a year earlier.

Cummings described the growth of sustainable and responsible investing as a “standout trend”.