The UK investment management industry recorded an impressive 10% growth in assets under management (AUM) to reach a new peak of £10.0 trillion in 2024 (£9.1 trillion, 2023), according to the latest figures from the Investment Association (IA).
The 10% growth in AUM is reflective of strong market performance throughout 2024, which saw the industry bounce back to surpass 2021 levels and reverse 2022’s market-driven dip. The sector has been boosted by strong equity returns, better economic conditions and an increasing number of assets managed from the UK on behalf of overseas investors. UK funds under management (FUM) rose 5% to £1.49trn, reflecting improved investor confidence and market returns.
Strong retail market growth
Assets managed on behalf of retail investors reached 28% in 2024, making up a higher percentage of total AUM than pension funds (27%) for the first time. Since 2020 and the Covid-19 pandemic we have seen sustained growth and interest in retail assets.
Our industry is poised to build on the momentum in this section of the market and enable more people to benefit from the long-term growth potential of investing. According to the FCA, 3 in 5 UK adults with over £10,000 of investible assets hold at least three-quarters of these savings in cash. The IA is proud to be spearheading the recently announced government-backed campaign to build awareness of the importance of investing to peoples’ future financial wellbeing and long-term resilience.
In tandem to the growth in retail assets, pension assets have fallen from a peak of 45% of total AUM in 2018 to 27% in 2024. This is driven by factors including increasing numbers of Defined Benefit (DB) schemes winding down as the profile of members gets older and DB schemes reaching full funding and transferring their liabilities and assets to insurers. The impact of the 2022 gilt crisis has also been felt in the institutional market.
A leader on the global stage
2024’s performance has cemented the UK investment management industry’s position as a global leader. Assets managed on behalf of overseas clients surpassed 50% for the first time (51%), making up £5.1 trillion of AUM.
Overseas client assets have more than doubled over the past decade, growing at a faster rate than UK client assets, which increased roughly 40% over the same period. We have seen a return to growth in European client assets in 2024, which now account for 59% of overseas AUM, totalling £3.0 trillion – up by 20% year on year.
In addition, UK investment management firms manage £990 billion of assets for North American investors and £740 billion on behalf of clients in Asia-Pacific. Assets managed for Latin-American clients were the fastest growing in 2024, increasing by 40% to reach £70 billion.
Index strategies on the rise as ETF demand grows
Indexing strategies are taking a growing slice of the pie in the UK, reflecting the demand for lower cost investment options. Indexing strategies reached their highest ever level of 35% of AUM in 2024, after a slight dip in 2023 due to market volatility and LDI assets temporarily denting growth.
While active management still represents roughly two-thirds of assets, index trackers have grown by almost a quarter (24%) over the past decade.
The acceleration of indexing strategies in 2024 is likely to have been boosted by the expansion of the European ETF market, which saw AUM increase 33% over the year to reach over €2.2 trillion, according to data from Morningstar.
Of the £4.9 trillion of assets managed from the UK that sit in investment funds, almost three quarters (69%) are in funds domiciled overseas. Most of 2024’s investment fund growth came via funds domiciled in Ireland, which now make up over half of overseas fund assets managed from the UK. Morningstar data show assets in European domiciled ETFs boomed in 2024, rising from €1.6 trillion to €2.2 trillion, with 80% of the growth coming from growth in Irish domiciled vehicles.
UK investment firms manage over £3 trillion of overseas-domiciled fund assets, showcasing how UK expertise continues to drive international portfolios.
Chris Cummings, CEO of the Investment Association, commented:
“The UK investment management industry has reached record highs over the past year, a testament to firms’ resilience amidst geopolitical and economic uncertainty. The industry has not only adapted to the challenges of 2022 and 2023, but has flourished, with assets under management now reaching £10.0 trillion.
“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.”
