Scotland retains status as major centre of asset management expertise in the UK
Scotland is a major centre in the national asset management industry, managing £615 billion equating to 8% of assets under management in the UK in 2017, according to the latest Investment Association figures*.
Data published in the annual Asset Management Survey also reveals that the wider UK asset management industry grew to a record £7.7 trillion, maintaining its standing as the second largest asset management centre in the world.
Edinburgh is the leading centre of asset management activity in Scotland. The largest proportion of asset management-related jobs in Scotland relate to operations, fund administration and corporate finance. Around 7,500 people are employed directly in asset management in Scotland. A further 5,500 jobs are supported by the industry across Scotland – up nearly 6% on last year.
Chris Cummings, Chief Executive of the Investment Association said: “Scotland plays an invaluable role in maintaining the UK’s position as a world class asset management centre. Our industry continues to be a large employer in Scotland, attracting highly skilled talent who are supporting the industry’s efforts to drive innovation and efficiency. We are also playing an increasingly significant role across the UK economy with £1.7 trillion of investment, providing vital funding for UK businesses and infrastructure across the country.
“The IA’s latest data also reveal that assets managed in the UK for European clients increased by nearly 30% in 2017 to £1.8 trillion, making Europe the largest source of overseas assets for UK asset managers. The clear value the European market brings to the UK asset management industry underlines the urgent need for a Brexit deal to be completed by March 2019 which protects our industry, and more importantly, the savings of millions of people right across Europe.”
The Brexit context
The UK’s status as a preeminent global centre of asset management expertise has seen assets under management from overseas clients increase by almost a fifth to £3.1 trillion, over half of which (£1.8 trillion) is from European investors.
In Europe, the UK remains the largest centre of asset management (larger than the next three countries - Germany, France and Switzerland - combined), where it manages 35% of AUM.
Investors are engaging UK based fund managers to invest around the globe. In 2017, 70% of equities managed in the UK were overseas, up from 49% a decade ago. The same theme is evident in fixed income markets where overseas bonds now represent 42% of all fixed income assets - up from a third in 2011.
The asset management industry also makes an important contribution to export earnings, responsible for 6% of UK net service exports, and the value of export receipts has risen seven times in the last 20 years.
Supporting the wider UK economy
Asset management is an indispensable part of the UK economy, providing vital funding for UK businesses and infrastructure. £1.7 trillion is invested in the UK economy across diverse asset classes through asset managers. This includes asset managers’ UK equity holdings, approximately £920 billion in 2017, and worth a third of the FTSE.
UK asset managers are also increasingly funding businesses through private markets with £31 billion invested in direct lending. The demand for direct lending and infrastructure from pension schemes and insurance companies is becoming more prominent. Infrastructure investment has seen considerable growth.
By the end of 2017, IA members had invested £40 billion in UK infrastructure, a 40% increase from £29 billion the year before. Three quarters of this investment is in economic infrastructure including energy, transport and environmental projects. The remaining 25% is invested in projects which provide a social benefit, such as schools and hospitals.
* The Asset Management Survey captures asset management undertaken by Investment Association’s member firms. The figures are stated as at December 2017.
Please see the full report here.