Assets under management of the UK fund management industry increased for the third year running in 2005 to USD 3,450 billion.
The 7% growth in 2005 noted in the latest edition of IFSL's Fund Management report, was largely due to an increase in private client funds and alternative funds such as hedge funds and property funds. London continues to be the leading international centre for fund management with around a quarter of its funds under management from overseas.
UK institutional funds (pension funds, insurance companies, local authority, etc.) were the source of two-thirds of funds under management. Around 15% came from retail funds (unit and investment trusts), 11% from alternative funds (hedge funds, property funds and private equity funds) and the remaining 8% from private clients.
Fund management makes a significant contribution to the UK economy, accounting for 0.75% of GDP, generating revenue of GBP 11 billion and employing over 40,000 people in 2005. Net exports of fund managers' services rose by 30% in 2005 to a record GBP 2bn.
Worldwide conventional fund management assets (pension, insurance and mutual funds), reached USD 55.0 trillion at the end of 2005, up 10% on the previous year and 54% on 2002. Pension assets totalled USD 20.6 trillion, with a further USD 16.6 trillion invested in insurance funds and USD 17.8 trillion in mutual funds. There was also an additional USD 33.3 trillion in private wealth, of which around two thirds cannot be accounted for by other forms of conventional investment management. The UK is the third largest market for fund management after the US and Japan, and is by far the biggest centre in Europe.