UK Retail Funds Under Management Down Sharply
Money flowed out of retail funds under management in the UK in the first eight months of this year as banks used their asset management arms to improve their liquidity, according to International Financial Services London. Reduced investor confidence has also resulted in negative retail fund flows, with UK domiciled retail funds declining to £427 billion in August. This compares with £769 billion at the end of 2007.
Early indicators for 2008 show that the industry has experienced net outflows as some high street banks have used their asset management arms to improve the liquidity of their banking operations.
UK assets under management grew 8% to a record £4.1 trillion at the end of 2007, before the current credit crisis and record stock price declines took place, according to IFSL’s Fund Management 2008 report. Declines in net investment by insurance companies and unit & investment trusts were offset by increases in self-directed pension plans. A strong equity market in 2007 also contributed.
UK institutional funds were the source of two-thirds of funds under management in 2007. Around 17% came from retail funds (unit and investment trusts), 10% from alternative funds (hedge funds, property funds and private equity funds) and the remainder from private clients.
Worldwide conventional fund management assets, increased 14% in 2007 to $74.3 trillion (see Table below). Pension assets totalled $28.2 trillion, with a further $19.8 trillion invested in insurance funds and $26.2 trillion in mutual funds. Together with alternative assets, such as those of sovereign wealth funds, hedge funds, private equity funds and funds of wealthy individuals, assets of the global fund management industry probably totalled around $110 trillion.
Given the record market declines and the credit crisis, that number is undoubtedly much lower now.
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