The Investment Association (IA) is promoting the UK asset management industry through a report that explains the benefits of the industry to investors.
Readers of the report are told that UK asset managers play a pivotal role in powering the UK economy and that businesses and consumers receive unique benefits from the asset management sector.
Three “key messages” for investors are in the report, including ‘economies of scale’, which essentially tells investors it would be too expensive to replicate funds themselves.
But the report steps back from answering critics of active management who have accused the industry of charging high fees for underperformance.
“While much of the debate on the benefits of asset management has focused on the financial performance of funds relative to a set of standard benchmarks, this study explores the economic value of the fundamental functions of asset management services,” the report says.
Economic consultancy Oxera, in conjunction with the IA, produced the report that notes the importance of asset managers to finance. Since the financial crisis, asset managers have purchased 60-70% of corporate bond issuances in the UK and funded around 40% of IPOs and equity issues annually.
At a time when banks are shying away from corporate lending, this funding is invaluable to the growth and maintenance of the UK private sector, in particular small and new businesses, the report says.
Another finding is that the vast majority of UK households draw on asset management services in some form or another, with approximately 75% having occupational or personal pension wealth, and around 14% of gross household financial wealth being held in retail investment funds, compared with only 9% of wealth held in direct investments.
The report also highlights the portfolio diversification and number of asset classes the industry gives to individual investors.
The report, ‘The contribution of asset management to the UK economy’, can be read here
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