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Confidence booster

Last month saw two impressive sets of figures from the fund management industry. The first highlights the growth and importance of this industry globally and domestically while the second perhaps indicates a rise in confidence among retail investors as they return to the market following a steady decline in retail sales since 2000, with 2005 starting to see signs of a recovery.

The IMA recently published the most comprehensive survey of the UK asset management industry. UK assets under management, managed by the IMA’s 137 members, as of the end of December 2005, were 2.8tn up by 30 per cent from the previous survey (which covered the year to the end of June 2004).

Twenty per cent of these assets are managed on behalf of overseas clients, highlighting the importance of overseas business to the UK. In addition, once hedge funds, private equity and other assets managed by non-IMA members are taken into account, the IMA estimates that more than 3tn of assets are now managed in the UK.

The survey also calculated that retail products – UK-managed unit trusts and Oeics, investment trusts and other retail products – amounted to 530bn, of which we estimate that about 200bn is managed in the UK but domiciled in Luxemburg, Dublin and other overseas locations.

This survey demonstrates not only the strength of the UK asset management industry but also the importance of the UK as a global financial centre.

The second set of statistics published last month were the latest investment fund statistics covering June 2006, showing that funds under management have reached 370bn, an increase of 24 per cent on June 2005.

The statistics also show that retail investors put over 8bn into funds in the first six months of 2006, just about matching the total for the whole of the previous year and putting 2006 on track for the biggest net inflows since 2000. Net retail sales for June were more than double those of May and net Isa sales, at 191m, were up 24 per cent on the previous month.

The IMA believes that much of the investment is coming through fund supermarkets and life company platforms, both of which are rapidly becoming major players in the investment market.

In terms of where the money is going, the specialist sector was the most popular, largely due to its property funds. Overall, however, investors remain cautious, preferring bonds to equities by far. Isa investors are in turn showing a preference for balanced sectors and shying away from equity funds.

Where does this all lead to? Certainly, if current trends continue, it is good news for fund managers and advisers alike. The trick will be to sustain the upturn through the inevitable ups and downs that the market is likely to face in the coming months and years. Advisers have a tough job to do to encourage this sustained investing in the face of the inevitable urge for investors to sell up when the going gets tough. All we can do is hope that both investor confidence and the market remain buoyant.

Mona Patel is head of communications at the IMA


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