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Insurance companies managed a third of UK funds in 2004, followed by investment banks (18%), retail banks (18%), independent fund managers (17%) and pension funds (6%). Most of the remainder was managed by custodians and hedge funds.
UK institutional funds (pension funds, insurance companies, unit and investment trusts) were the source of two-thirds of funds under management. Overseas clients generated a quarter of funds and UK private clients the remaining 8%.
Fund management makes a significant contribution to the UK economy, accounting for 0.5% of GDP, employing over 40,000 people and generating net exports of £1.42bn in 2004. Revenue of UK fund management activities totalled £7.7bn in 2004 as fund managers’ margins increased slightly to around 26% in 2004.
Worldwide conventional fund management assets (pension, insurance and mutual funds), reached $45.9 trillion at the end of 2004, up 6% on the previous year and 40% on 2002. Pension assets totalled $15.3 trillion, with a further $16.2 trillion invested in mutual funds and $14.5 trillion in insurance funds (see Table below).
There was also an additional $30.8 trillion in private wealth, of which around two thirds cannot be accounted for by other forms of conventional investment management. Part of the increase in global funds under management in dollar terms over the past two years is explained by a 19% fall in the value of the dollar during this period. The UK is the third largest market for fund management after the US and Japan. It is by far the biggest centre in Europe.