The UK investment management industry’s assets under management (AUM) rose by 10 per cent to a record high of £10trn in 2024, up from £9.1trn in 2023, according to data from the Investment Association (IA).

The association said the 10 per cent growth in AUM reflected strong market performance in 2024, with the industry recovering to surpass 2021 levels and reverse 2022’s market-driven dip.

Strong equity returns, better economic conditions, and an increasing number of assets managed in the UK for overseas investors boosted the sector last year.

UK funds under management (FUM) increased by 5 per cent year-on-year to £1.49trn amid improved investor confidence and market returns.

The IA revealed that assets managed on behalf of retail investors hit 28 per cent last year, making up a higher percentage of total AUM than pension funds (27 per cent) for the first time.

Pension assets had fallen from a high of 45 per cent of total AUM in 2018 to 27 per cent in 2024, as increasing numbers of defined benefit schemes wound down and the impact of the 2022 gilts crisis was felt in the institutional market.

In the UK investment management industry, assets managed on behalf of overseas clients surpassed 50 per cent for the first time (51 per cent), making up £5.1trn of AUM.

The IA noted that overseas client assets have more than doubled over the past 10 years, growing at a faster rate than UK client assets, which have risen by around 40 per cent over the same period.

Managed European client assets returned to growth in 2024, accounting for £3trn (59 per cent) over overseas AUM, up by 20 per cent year-on-year.

UK investment management firms also manage £990bn of assets for North American investors and £740bn for clients in Asia-Pacific.

Assets managed for Latin-American clients were the fastest growing in 2024, increasing by 40 per cent to reach £70bn.

Index strategies

Index strategies were growing in popularity amid demand for lower cost investment strategies, reaching a record high of 35 per cent of AUM in 2024.

Although active management still represented around two thirds of assets, index trackers have growth by 24 per cent over the past decade.

The acceleration of indexing strategies in 2024 was likely to have been boosted by the expansion of the European ETF market, the IA noted.

Of the £4.9trn of assets managed from the UK that reside in investment funds, 69 per cent were in funds domiciled overseas.

Most of 2024’s investment fund growth came through funds domiciled in Ireland, which now make up over half of overseas fund assets managed from the UK.

UK investment firms managed over £3trn of overseas-domiciled fund assets, which the IA said showcased how UK expertise continued to drive international portfolios.

“The UK investment management industry has reached record highs over the past year, a testament to firms’ resilience amidst geopolitical and economic uncertainty,” commented IA CEO, Chris Cummings.

“The industry has not only adapted to the challenges of 2022 and 2023, but has flourished, with assets under management now reaching £10trn.

“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.

“The UK government’s recent efforts to boost domestic capital through the Leeds Reforms signal a powerful alignment between government, regulator, and industry.

“As retail assets continue to take a growing share of industry AUM, we look forward to building on this momentum to drive further growth and enable more people across the UK to benefit from the long-term growth potential of investing.”

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