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IA reveals level of responsible investment among UK asset managers

responsible investment approachJust over a quarter of UK firms’ total assets under management (AUM) were invested using a responsible investment approach last year, according to the latest industry data.

The Investment Association, the main industry trade body in the UK, said AUM last year was £7.7 trillion and almost all the firms with responsible investments were integrating environment, social and governance factors into their investment processes.

Sustainability is a critical global issue on which investment managers are playing their part, the IA said.

The data is published in a wider state-of-the-industry report, which finds the UK asset management sector is in good health and remained a “global success story” despite Brexit pressures.

AUM had increased 150% over the past decade and the UK maintained its position as the second largest investment management hub in the world following the US, with more assets under management than the next three European centres combined, namely France, Germany, and Switzerland, the IA said.

The trade body also found that 40% (£3.1 trillion) of UK managed assets were from overseas clients in 2018, with almost 60% of these assets coming from savers in Europe.

Assets managed for North American clients saw the biggest relative increase, at 11%, from £510 billion in 2017, to £565 billion in 2018.

Further findings – which are published in ‘Investment Management in the UK 2018-2019’ – include:

  • 70% (£1.1 trillion) of UK managed equity funds were invested overseas, compared to 54% a decade ago.
  • Overseas bond allocations increased to 49% (£1.3 trillion) in 2018 compared to 42% in 2017.
  • Managers invested £1.6 trillion into the UK economy, including £850 billion into UK equities and a further £30 billion lent directly to businesses.
  • £35 billion was invested in infrastructure, a decrease of £5 billion on 2017.
  • Three quarters of that £35 billion was invested in economic infrastructure including energy, transport and environment projects.
  • The remaining 25% funded projects that bring a social benefit, such as schools and hospitals.
  • The industry employs over 39,000 people, a 4% increase from 2017.

Chris Cummings, IA chief executive, said: “Against economic and political headwinds, the UK investment management industry has been resilient and remains a domestic and international success story.

“Our ability to seize global opportunities has seen the industry enjoy a decade of robust growth, with an increasing number of savers from around the world choosing to use the services of a UK investment manager.”

©2019 funds europe