Table of Contents
Introduction
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- Product definitions
- Abbreviations
Executive Summary
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- The market
- Gross retail sales of open-ended funds expected to continue their steady climb
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- Figure 1: Forecast of gross retail unit trust and OEIC sales – fan chart, 2006-16
- Gross sales increased in 2010, but net sales were down on 2009
- Outlook for 2011
- Investment trust sales and recent performance
- The open-ended sector is larger than the closed-ended by assets under management
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- Figure 2: Retail investment product sales, year to 31 March 2010
- Market factors
- Uncertain economic and investment backdrop
- Regulatory changes create new opportunities
- Companies, brands and innovation
- Fund launch activity
- Leading fund managers
- Largest investment companies
- Advertising activity
- Distribution trends
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- Figure 3: Gross retail sales of unit trusts and OEICs, by distribution channel, 2006-10
- RDR
- The consumer
- Six million people have an equity ISA or hold collective investments outside the ISA wrapper
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- Figure 4: Ownership of savings and investment products, May 2011
- Savings and investment activity over the past year
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- Figure 5: Level of saving/investment activity over the past year, May 2011
- Investor behaviour and motivation
- Investment intentions over the coming year
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- Figure 6: Savings and investment products planning to invest in within the next 12 months, May 2011
- What we think
Issues in the Market
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- Why is the closed-ended sector so much smaller than the open-ended sector?
- How will the new EU directive on alternative investment fund managers affect the investment company industry?
- What other opportunities lie in wait for investment companies?
- Similarly, what opportunities are on the horizon for open-ended fund managers?
- In which asset classes will consumers invest their money over the coming year?
Future Opportunities
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- Trend: Seeking security in these uncertain times
- Trend: Increasing longevity is challenging the traditional view of age-related asset allocation
Internal Market Environment
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- Key points
- Banking reform and a new regulatory framework
- New opportunities for investment trust companies
- UCITS and other European legislation
- The RDR – positive outcomes and potential pitfalls
- Implications for investment companies
- Implications for fund managers
- Other recent developments
Broader Market Environment
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- Key points
- Government looks to the private sector to stimulate economic growth
- Greek debt crisis could jeopardise the economic recovery in the UK
- Level of household savings declines due to slower earnings growth
- Greek debt crisis again unsettles the markets
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- Figure 7: FTSE 100 and FTSE All-Share – daily index movements, June 2002-June 2011
- Low base rate and high inflation makes cash an unattractive asset class
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- Figure 8: Average annual changes in the Bank of England base rate, CPI and RPI – UK, 2003-12
- Investor sentiment weakens
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- Figure 9: Intended equity buying and selling indices, Q3/Q4 2002- Q1/Q2 2011
Competitive Context
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- Key points
- Rival investment products
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- Figure 10: Retail investment product sales, year to 31 March 2010
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- Figure 11: Market value of funds held in stocks and shares ISAs, 2010 (provisional)
- Open-ended collectives versus investment bonds
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- Figure 12: Comparison of unit trusts/OEICs and investment bonds, 2011
- Unit trusts and OEICs outsell investment bonds
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- Figure 13: New investment bond premiums versus gross retail unit trust/OEIC sales, 2006-10
- ETFs are growing in popularity, albeit from a small base
Market SWOT Analysis
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- Figure 14: UK collective investment market – SWOT analysis, 2011
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Who’s Innovating?
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- Key points
- IMA sector review
- New product launches in the open-ended fund sector
- Recent activity in the closed-ended sector
Trade Perspective
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- About the AIC
- These more uncertain times
- New regulation furnishes new opportunity
- AIC plans to implement a new adviser education programme
- Bright outlook for investment companies
Market Size and Forecast
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- Key points
- Open-ended funds
- Retail unit trust and OEIC sales grow further in 2010
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- Figure 15: Retail sales of unit trusts and OEICs – UK-domiciled, 2006-10
- Outlook for 2011
- Five-year forecast
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- Figure 16: Gross retail sales of unit trusts and OEICs – UK-domiciled – fan chart, 2006-16
- Figure 17: Forecast of gross retail sales of unit trusts and OEICs – UK-domiciled, at current and constant prices, 2006-16
- Forecast methodology
- Fan chart explanation
- Closed-ended investment companies
- Retail investment trust sales start to recover
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- Figure 18: Volume of regulated retail sales of investment trusts, unit trust/OEICs and stocks and shares ISAs, 2006-10
- Outlook bright for investment companies
- Just over a quarter of closed-ended investment company assets are held offshore
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- Figure 19: Number of closed-ended investment companies and value of assets, May 2001, May 2010 and May 2011
Segment Performance
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- Key points
- Open-ended sector – bonds lose their shine
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- Figure 20: Net retail unit trust/OEIC fund sales (UK-domiciled), by asset class, 2006-10
- Open-ended sector – strong growth in the balanced asset class in 2010
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- Figure 21: Unit trust/OEIC funds under management (UK-domiciled only), by asset class, 2006-10 (year-end)
Market Share
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- Key points
- Invesco Perpetual is the largest open-ended fund manager...
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- Figure 22: Top 20 fund managers, by retail and private client funds under management (minimum lump sum is £50,000 or less), 2009-11
- ...but HBOS takes the lead in the ISA fund market
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- Figure 23: Top ten ISA fund managers, by ISA and PEP funds under managements, 2009-11
- JPMorgan is the largest investment trust provider in the UK
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- Figure 24: Top 20 investment management groups, ranked by assets under management, March 2011
Companies and Products
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- Top three unit trust/OEIC fund managers
- Invesco Perpetual
- M&G
- Fidelity
- Top three investment trust managers
- JPMorgan Asset Management
- F&C Investments
Brand Communication and Promotion
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- Key points
- Adspend on investment products is still way down on pre-crisis levels
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- Figure 25: Total advertising expenditure on investment products and intermediary services, by product category, 2007-11
- Fidelity is the top advertiser for the second year in a row
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- Figure 26: Top ten advertisers of collective investments and stocks and shares ISAs, 2009-11
- Providers mostly rely on the press and direct mail to promote their brands and products
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- Figure 27: Adspend on collective investments and stocks and shares ISAs, by media type, 2009-11
Channels to Market
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- Key points
- Intermediaries continue to grow their share of open-ended fund sales
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- Figure 28: Gross retail sales of unit trusts and OEICs, by distribution channel, 2006-10
- More than a third of fund sales were transacted via open-architecture platforms in 2010
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- Figure 29: Share of gross retail unit trust and OEIC sales, by distribution channel, 2010
- Platform development
- RDR implications for platforms
- RDR reforms will raise the profile of investment trusts
Ownership of Savings and Investments
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- Key points
- Survey background
- Latest survey records a fall in the proportion of UK adults with savings
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- Figure 30: Ownership of common savings and investment products, 2009-11
- Some six million UK adults hold collective investments either in or outside an ISA
- AB males are a major target group
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- Figure 31: Ownership of savings and investments, by gender and socio-economic group, May 2011
- Ownership of collective investments is highest among the over-45s…
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- Figure 32: Ownership of savings and investments, by age, May 2011
- Insight and implication
- …and increases with household income
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- Figure 33: Ownership of savings and investments, by gross annual household income, May 2011
- Insight and implication
Recent Investment Activity
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- Key points
- Two fifths of people saved less than they expected to over the past year
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- Figure 34: Level of saving/investment activity over the past year, May 2011
- Insight and implication
- A similar pattern emerges among the holders of collective investments…
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- Figure 35: Level of saving/investment activity over the past year, by ownership of savings and investments, May 2011
- …while there is some variance among the different age groups
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- Figure 36: Level of saving/investment activity over the past year, by age, May 2011
- Note
Investor Behaviour
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- Key points
- Half of all savers/investors drew on their savings during the past year
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- Figure 37: Experiences and attitudes towards savings and investing, May 2011
- Those who saved less than they expected over the past year are also very likely to have drawn on their savings
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- Figure 38: Experiences and attitudes towards saving and investing, by level of investment activity over the past year, May 2011
- Those aged 35-64 are most likely to be saving for the longer term
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- Figure 39: Experiences and attitudes towards savings and investing, by age, May 2011
- AB men are keenest on making their own investment decisions
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- Figure 40: Experiences and attitudes towards savings and investing, by gender and socio-economic group, May 2011
Investment Plans for the Coming Year
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- Key points
- Around one in 12 UK adults plan to invest in equity ISAs or collective investments during the next year
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- Figure 41: Products planning to invest in during the next 12 months, May 2011
- Growing interest in ETFs, reduced appetite for investment bonds
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- Figure 42: Products planning to invest in during the next 12 months, May 2011
- Clients of IFAs and stockbrokers will be the most active investors over the coming year
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- Figure 43: Products planning to invest in during the next 12 months, by usage of advisers, May 2011
- ABC1s aged 35-54 is the primary target group
Appendix – Market Forecast
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- Figure 44: Best and worst forecast of gross retail sales of unit trusts and OEICs – UK-domiciled, 2011-16
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Appendix – Ownership of Savings and Investments
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- Figure 45: Ownership of savings and investments, by demographics, May 2011
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Appendix – Collectives/Equity ISA Investor Profile
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- Figure 46: Investor profile of those who own collectives and/or stocks and shares ISAs, by demographics, May 2011
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Appendix – Recent Investment Activity
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- Figure 47: Level of investment activity over the past year, by demographics, May 2011
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Appendix – Investment Plans
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- Figure 48: Products intend to invest in within the next 12 months, by demographics, May 2011
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Appendix – Comparison of Open- Versus Closed-ended Funds
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- Figure 49: Key characteristics of the three main types of collective investment
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