Table of Contents
Issues in the Market
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- Key issues
- Market definitions
- Other useful terms
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- Figure 1: Key characteristics of the three main types of collective investment
- Abbreviations
Future Opportunities
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- The rise of behavioural economics
- The role of emotion in financial decision-making
- Security often takes precedence over the level of return
- People often need a nudge in the right direction
- Less is more
- No Middleman
- DIY investing
Market in Brief
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- The open-ended sector is much larger than the close-ended by AUM
- Fund performance and retail demand both improved during 2009
- Market outlook – tough conditions suggest cautious optimism
- Macroeconomic and investment backdrop
- Wider market context
- Regulatory developments
- Recent market innovation
- Leading fund managers
- Distribution trends
- Advertising activity
- The key findings of Mintel’s consumer research: product ownership
- The main reasons for saving
- Investment engagement and advice
- Attitudes towards risk and investment interest
Internal Market Environment
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- Key points
- Investment conditions
- Renewed investor confidence during 2009…
- …but undermined by troubles in the eurozone in first half of 2010
- Investors are cautious, but not put off equities entirely
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- Figure 2: Intended equity buying and selling indices, Q3/Q4 2002- Q2/Q3 2010
- Regulation update
- New government, new banking reform
- Tax reform
- RDR will go ahead under new regulatory structure
- New rules introduce new fee-charging structures
- Implications for fund managers
- Implications for investment trusts
- UCITS IV
- AIFMD – creating a ‘harmonised framework’ or ‘regulatory overkill’?
- Other recent regulatory developments
Broader Market Environment
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- Key points
- Economic backdrop – uncertainty reigns
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- Figure 3: Total GDP, at current prices, 2006-13
- European debt crisis could undermine the recovery in the UK…
- …and has unsettled the markets
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- Figure 4: FTSE 100 and FTSE All Share – daily index movements, June 2001-June 2010
- Confidence remains firmly in negative territory
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- Figure 5: GfK Consumer Confidence Barometer – UK, January 1988-June 2010
- Savings ratio increased to 7% in 2009
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- Figure 6: Total PDI, consumer expenditure and savings, at current and constant 2010 prices, 2006-13
- Hedging for tomorrow’s rise in inflation
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- Figure 7: Average annual changes in the Bank of England base rate, CPI and RPI – UK, 2001-10
Competitive Context
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- Key points
- Crisis led to a 12% drop in household wealth in 2008…
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- Figure 8: Net worth of the household sector, 2005-09
- …although the value of household assets rebounded in 2009
- OEICs and unit trusts account for more than a quarter of all funds held in ISAs
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- Figure 9: Value of funds held in ISAs, 2006-09
- Investment bonds hit by changes in tax rules
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- Figure 10: Value and volume of investment bond sales, 2005-09
- Unit-linked bonds are the most popular type
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- Figure 11: Proportional distribution of investment bond sales, by type, based on total new premiums, 2005-09
Market SWOT Analysis
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- Figure 12: UK collective investment market – SWOT analysis, 2010
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Who’s Innovating?
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- Key points
- More retail investors appreciate the benefits of ETFs
- Offshore funds now included within IMA sector classifications
- New product launches in the open-ended fund sector
- An emphasis on transparency
- Recent activity in the close-ended sector
Trade Perspective
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- About the AIC and IMA
- New regulation represents both a challenge and an opportunity
- Resolving regulatory issues
- Drip-feed investment to smooth out the rough
- Offshore funds provide a timely alternative to UK income
- Low interest rates and an increased ISA allowance will hold up demand for income-bearing investments
- A more stable environment is needed to sustain the attraction of the UK as a home for investment funds and international asset management activity
Market Size and Forecast
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- Key points
- Total assets held by close-ended investment companies are worth over £87 billion
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- Figure 13: Volume and value of close-ended investment companies, May 2001 and May 2010
- Investment company activity picked up in the second half of 2009
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- Figure 14: Trends in market capitalisation of investment trust companies, 2005-09
- 2010 outlook: conditions still challenging, but there’s greater optimism
- Strong performance across all asset classes in 2009
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- Figure 15: Unit trust/OEIC funds under management, by asset class, 2005-09 (year-end)
- Retail sales recover well in 2009…
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- Figure 16: Retail sales of unit trusts and OEICs – UK-domiciled, 2005-09
- …but can this be sustained?
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- Figure 17: Forecast of gross retail sales of unit trusts and OEICs – UK-domiciled, at current and constant prices, 2005-15
- Factors incorporated
Market Share
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- Key points
- JPMorgan is the largest investment trust provider in the UK…
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- Figure 18: Top 20 investment management groups, ranked by assets under management, March 2010
- …while Invesco Perpetual is the top open-ended fund manager…
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- Figure 19: Top 20 fund managers, by retail and private client funds under management (minimum lump sum is less than or equal to £50,000), March 2008-March 2010
- …and Fidelity leads in the ISA fund market
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- Figure 20: Top ten ISA fund managers, by ISA and PEP funds under managements, March 2009 and March 2010
Companies and Products
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- Top three investment trust managers
- JPMorgan Asset Management
- 3i Group
- F&C Investments
- Top three retail open-ended fund managers
- Invesco Perpetual
- M&G
- FIL Investment Management
Brand Communication and Promotion
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- Key points
- Investment adspend increases slightly
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- Figure 21: Total advertising expenditure on investment products and services, by product type, 2006-10
- Fidelity and Hargreaves Lansdown spent the most on advertising in the 12 months to April 2010
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- Figure 22: Top ten collective investment advertisers, 2009 and 2010
- Most adspend is concentrated on the press and direct mail
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- Figure 23: Collective investment advertisement expenditure, by media type, 2009 and 2010
Channels to Market
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- Key points
- Intermediaries dominate the sale of retail investment funds
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- Figure 24: Gross retail sales of unit trust and OEICs, by distribution channel, 2005-09
- Fund platforms generated just over two fifths of ISA fund sales in 2009
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- Figure 25: Gross retail sales of ISA funds, by distribution channel, 2005-09
- Platform progress
- Market differentiation
- New platforms emerging
- Investment companies should benefit from RDR reforms
The Consumer – Ownership of Savings and Investments
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- Key points
- Survey background
- Collective investments are held by a very fairly small proportion (6%) of the UK’s adult population…
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- Figure 26: Ownership of common savings and investment products, 2009 and 2010
- …but penetration increases sharply among the newly retired population
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- Figure 27: Ownership of common savings and investment products, by age, April 2010
- Insight and implication
- AB males represent a key target group
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- Figure 28: Ownership of common savings and investment products, by gender and socio-economic group, April 2010
- Insight and implication
- Household income and investment holdings
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- Figure 29: Ownership of common savings and investment products, by gross annual household income, April 2010
- Insight and implication
The Consumer – Investment Motivations
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- Key points
- Most people are saving or investing for their own financial security
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- Figure 30: Main reasons for saving or investing, April 2010
- Reasons for saving vary with age
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- Figure 31: Main reasons for saving or investing, by age, April 2010
- Men are more inclined than women to save for their retirement
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- Figure 32: Main reasons for saving or investing, by gender and socio-economic group, April 2010
- Retirement saving – a luxury only open to higher earners?
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- Figure 33: Main reasons for saving or investing, by gross annual household income, April 2010
- Equity investors are much more likely to be saving for retirement or tax reasons
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- Figure 34: Main reasons for saving or investing, by types of savings and investment products held, April 2010
The Consumer – Investor Behaviour
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- Key points
- Collective investors are more financially astute
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- Figure 35: Agreement with statements relating to investment acumen, performance, advice and online experience, by type of savings or investment product held, April 2010
- One in six have traded online…
- …but one in four rarely or never take professional advice
- More are unhappy than happy with the performance of their investments
- Knowledge comes with experience
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- Figure 36: Agreement with statements relating to investment acumen, performance, advice and online experience, by age, April 2010
- Men and women generally behave differently when it comes to investing
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- Figure 37: Agreement with statements relating to investment acumen, performance, advice and online experience, by gender and socio-economic group, April 2010
- Wealthier savers are more likely to seek expert advice…
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- Figure 38: Agreement with statements relating to investment acumen, performance, advice and online experience, by gross annual household income, April 2010
- …as are those who are investing for tax-related reasons
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- Figure 39: Agreement with statements relating to investment acumen, performance, advice and online experience, by main motivation to save/invest, April 2010
The Consumer – Targeting Opportunities
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- Key points
- Half of all collective investors are prepared to accept some risk for a potentially higher return
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- Figure 40: Attitudes towards saving and investing, by type of savings and investment product held, April 2010
- Appetite for risk diminishes post-retirement
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- Figure 41: Attitudes towards saving and investing, by age, April 2010
- Men are much more inclined to accept some risk when it comes to investing money
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- Figure 42: Attitudes towards saving and investing, by gender and socio-economic group, April 2010
- One in six people on the highest income scale prefer to invest in property than equities
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- Figure 43: Attitudes towards saving and investing, by gross annual household income, April 2010
- Those saving for tax reasons are most pro equity investment
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- Figure 44: Attitudes towards saving and investing, by most popular main reasons for saving or investing, April 2010
Appendix – Ownership of Savings and Investments
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- Figure 45: Demographic profile of collective investors, April 2010
- Figure 46: Ownership of savings and investment products, by demographics, April 2010
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