Retail assets greater than pension funds for first time.

Data published by the UK’s Investment Association (IA) point to record AUM of £10trn across the industry as at the end of 2024, up some 10% on the previous year following strong equity returns, improving economic conditions and growth in assets managed from the UK on behalf of overseas investors.

According to highlights outlined by the IA from its 2024-2025 Investment Management Survey (the full report will be published in September):

£1.49trn – UK funds under management

51% – share of UK assets managed for overseas clients

69% – share of UK managed fund assets sitting in overseas domiciled funds

35% – share of UK AUM in index tracking strategies

28% – share of all AUM managed on behalf of retail clients

Another key finding of the industry is that 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. This has built on a trend seen since the Covid pandemic of sustained growth of retail assets.

The IA stated that it sees significant opportunity to maintain asset growth in the retail space, given the UK’s Financial Conduct Authority has estimated that of the 3 in 5 UK adults with over £10,000 in investible assets, at least 75% of these savings are in cash.

In contrast, pension assets have fallen from a peak of 45% of total AUM in 2018 to 27% in 2024. The IA cites 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.

Another milestone noted is that assets managed on behalf of overseas clients surpassed 50% for the first time (51%), making up £5.1trn 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, the IA noted.

European client assets in 2024 accounted for 59% of overseas AUM, totalling £3trn – up by 20% year on year.

UK investment management firms manage £990bn of assets for North American investors and £740bn on behalf of clients in Asia-Pacific. Assets managed for Latin-American clients were the fastest growing in 2024, increasing by 40% to reach £70bn.

Indexing strategies continued to take market share, as investors sought out lower cost investment options, the IA noted. The share reached a record high of 35% last year.

Active management still accounts for some two-thirds of assets, but index trackers have grown by some 24% over the past decade, the data suggests.

The European ETF market saw AUM increase 33% over the year to reach more than €2.2trn, according to data from Morningstar cited by the IA.

Of the £4.9trn 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.

Assets in European domiciled ETFs rose from €1.6 trillion to €2.2 trillion, with 80% of the growth coming from growth in Irish domiciled vehicles, again, according to the Morningstar data.

UK investment firms manage over £3trin of overseas-domiciled fund assets.

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.”