The UK asset management industry could reach assets under management (AUM) of £1.2 trillion (€1.7 trillion) by 2019, according to financial services firm EY.
2015 marks a fifth year of record-breaking assets under management for the industry and this growth is expected to continue, the group says in its outlook for financial services summer 2015.
AUM are expected to reach £920 billion in 2015, 6.5% higher than in 2014, and are forecast to grow at an average of 7% each year until 2019.
This growth is due to a combination of low interest rates, which have encouraged people to save more in investment products, and a general trend of rising household wealth.
EY says that pensions reforms are also stimulating some growth within the sector, as asset managers play the long game in developing new products.
Multi-asset funds are expected to continue to outperform the broader market as a result of increasing market volatility, concerns around liquidity, and heightened uncertainty about the prospects for individual asset classes. This asset class could see AUM rise by 44% to £183 billion by 2019.
Gill Lofts, UK head of wealth and asset management at EY, says: “The sector is currently enjoying the fruits of a strengthening economy and rising wealth, and prospects look bright. In particular, managers are focusing on bringing new long-term savings products to market, which will allow them to grab an ever-larger slice of the household pensions and savings pie.
“It’s not all plain sailing however, and there are challenges ahead, not least the growing scrutiny of regulators. Changes in taxation are also looming, with the recent reforms to dividend taxation potentially a harbinger of things to come.”
Other trends Lofts notes include the involvement of managers in new methods of developing and recruiting new talent – such as sponsorships at universities, or incubator initiatives; an interest in growing FinTech products in the UK, both from an investment perspective and as users; and pressure from consumers and regulators for wealth and asset managers to be more transparent and sustainable.
©2015 funds europe