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Collective Investments - UK - July 2013

Published By :

Mintel

Published Date : Jul 2013

Category :

Banking

No. of Pages : 156 Pages


A large number of UK retail investors are simply unprepared to put their money at risk by investing in equities. Given that a larger number of people save for emergencies and unexpected events, rather than to generate an income, most adults will always be wary of using products outside the traditional savings accounts and cash ISAs.
Table of Content

Introduction
Abbreviations

Executive Summary
The market
Gross retail sales of open-ended funds expected to grow in 2013 and onwards
Figure 1: Forecast for gross retail sales of unit trusts and OEICs (UK domiciled), 2008-18
Closed-ended sector is significantly smaller
The majority of funds are sold via intermediated channels
Figure 2: Gross retail sales of unit trusts and OEICs, by distribution channel, 2008-12
Competing retail investment products
Figure 3: Retail investment product sales, by volume, year to 31 March 2012
Market factors
Economic uncertainty continues to test investor fortitude
Key regulatory changes
Companies, brands and innovations
Market share is concentrated at the top
Adspend on investment products and intermediary services was down in 2012/13
Who’s innovating?
The consumer
Value of savings and investments
Figure 4: Value of savings and investments, May 2013
Investment portfolio
Figure 5: Savings and investment portfolio, May 2013
Saving and investing goals
Figure 6: Saving and investment goals, May 2013
Influential factors when choosing an investment fund
Figure 7: Important factors when choosing an investment fund, May 2013
Average length of time consumers hold investments
Figure 8: Average length of time investments held, May 2013
Consumer attitudes towards saving and investing
Figure 9: Attitudes towards investing and investments, May 2013
What we think

Issues in the Market
Why are investors shunning equity-based products?
How many adults are considering investing in collective funds in the next 12 months?
What are consumers’ main saving and investing goals?
Do investors look for passive or active fund management?

Trend Application
Watch your investment grow from the sidelines
Becoming a self-taught investor
Mintel futures: Generation Next

Market Drivers
Key points
Planned buying and selling of shares/unit trusts contracted in Q2/3 2013
Figure 10: Intended investment activity, Q3/Q4 2002-Q2/Q3 2013
FTSE 100 trading at its highest point since the financial crisis
Figure 11: FTSE 100 and FTSE All-Share – daily index movements, January 2006-May 2013
RDR should have a positive impact on investment trusts
FCA bans cash rebates on platforms
MIFID II and the potential conflict with the RDR
PRIPs update
BoE base rate remains at historical low
Figure 12: Average annual changes in the Bank of England base rate, CPI and RPI – UK, March 2008- March 2013
Households continue to face income squeeze
Figure 13: Monthly change in RPI and average weekly earnings, March 2008-March 2013

Competitor Products
Key points
There is some overlap among competing retail investment products
Figure 14: Retail investment product sales, by volume, year to 31 March 2012
Figure 15: Market value of funds held in stocks and shares ISAs, 2012
Unit trusts and OEICs significantly outsell investment bonds
Figure 16: New investment bond premiums versus gross retail unit trust/OEIC sales, 2009-12
ETFs should continue to gain momentum among UK investors

SWOT Analysis
Figure 17: UK collective investment market – SWOT analysis, 2013

Who’s Innovating?
Key points
Fundsmith launches regular withdrawal facility
THS Partners opens up access to its top-performing fund to retail investors
Candid Money launches fund supermarket comparison site
Exec-only platform to cater for low-value clients post-RDR
Fidelity launches a four-tier investment service

Market Size and Forecast
Key points
Open-ended funds
Net sales of OEICs continue to fall, declining by a quarter in 2012
Figure 18: Value of retail sales of unit trusts and OEICs – UK-domiciled, 2008-12
Market prospects as of June 2013
Five-year forecast
Figure 19: Forecast for gross retail sales of unit trusts and OEICs (UK domiciled), 2008-18
Figure 20: Forecast of gross retail sales of unit trusts and OEICs (UK domiciled), at current and constant prices, 2008-18
Forecast methodology
Fan chart explanation
Closed-ended funds
Retail investment trust sales declined by 40% in 2012
Figure 21: Volume of regulated retail sales of investment trusts, unit trust/OEICs and stocks and shares ISAs, 2008-12
RDR brightens the outlook for investment companies
A quarter of closed-ended companies operate offshore
Figure 22: Number of closed-ended investment companies and value of assets, March 2011-March 2013

Segment Performance
Key points
Open-ended sector – net sales decline by a quarter in 2012
Figure 23: Net retail unit trust/OEIC fund sales (UK-domiciled), by asset class, 2008-12
Equity-based funds account for a large proportion of open-ended funds
Figure 24: Unit trust/OEIC funds under management (UK-domiciled only), by asset class, 2008-12 (year-end)

Market Share
Key points
Invesco Perpetual and M&G Securities maintain their lead
Figure 25: Top 20 fund managers, by retail and private client funds under management (minimum lump sum is £50,000 or less), March 2011-March 2013
Top ten account for 75% of ISA fund market
Figure 26: Top ten ISA fund managers, by ISA and PEP funds under management, 2011-13
St James’s Place grows share of ISA fund market
JPMorgan is the largest investment trust provider
Figure 27: Top 20 investment management groups, ranked by assets under management, March 2013

Companies and Products
Top three unit trust/OEIC fund managers
Invesco Perpetual
Unit trust/OEIC retail funds under management as at 31 March 2013
Company description
Product range
Recent activity
M&G Securities
Unit trust/OEIC retail funds under management as at 31 March 2013
Company description
Product range
Recent activity
Recent promotional activity
BNY Mellon
Unit trust/OEIC retail funds under management as at 31 March 2013
Company description
Product range
Recent activity
Recent promotional activity
Top three investment trust managers
JPMorgan Asset Management
Investment trust assets under management as at 31 March 2013
Company description
Product range
Recent activity
F&C Investments
Investment trust assets under management as at 31 March 2013
Company description
Product range
Recent activity
Recent promotional activity
Aberdeen Asset Management
Investment trust assets under management as at 31 March 2013
Company description
Product range
Recent activity
Recent promotional activity

Brand Communication and Promotion
Key points
Adspend shrank in the year to March 2013 by almost a third
Figure 28: Total advertising expenditure on investment products and intermediary services, by product category, 2010/11-2012/13
Fidelity accounts for the largest proportion of industry adspend
Figure 29: Top ten advertisers of collective investments and stocks and shares ISAs, 2010/11-2012/13
Press advertising accounts for two thirds of adspend
Figure 30: Adspend on collective investments and stocks and shares ISAs, by media type, 2010/11-2012/13
A note about adspend

Channels to Market
Key points
Intermediated business accounts for 91% of unit trust/OEIC sales
Figure 31: Gross retail sales of unit trusts and OEICs, by distribution channel, 2008-12
Fund platforms account for over two fifths of intermediated sales
Figure 32: Share of gross retail unit trust and OEIC sales, by distribution channel, 2012
The impact of the RDR

Value of Savings and Investments
Key points
Half of adults have less than £10,000 in savings and investments
Figure 33: Value of savings and investments, May 2013
Older people have higher-valued assets, but young investors should not be overlooked
Figure 34: Value of savings and investments, by age, May 2013
Affluence is influential, however, starting small can yield big results
Figure 35: Most popular value of savings and investments, by household income, May 2013

Investment Portfolio
Key points
British investors show a strong preference towards risk-free and simple products
Figure 36: Savings and investment portfolio, May 2013
One in nine adults own a collective investment fund
Ownership of collective investments is skewed towards older, affluent males
High-net-worth clients more likely to own collective investment products
Figure 37: Savings and investment portfolio, by value of savings and investments, May 2013

Saving and Investing Goals
Key points
Emergencies and security top reasons for saving/investing
Figure 38: Saving and investment goals, May 2013
Saving and investment goals tend to be age-specific
Figure 39: Saving and investment goals, by age, May 2013
Retirement savings become more important later in life
High-net-worth clients more likely to have a number of savings and investment goals
Figure 40: Saving and investment goals, by value of savings and investments, May 2013

Influential Factors When Choosing an Investment Fund
Key points
Low fees and charges are the most influential factor for retail investors
Figure 41: Important factors when choosing an investment fund, May 2013
Collectives investors have slightly different priorities
Figure 42: Important factors when choosing an investment fund, by ownership of collective investments, May 2013
Active versus passive fund management
Actively managed funds more appealing to high-net-worth savers
Figure 43: Important factors when choosing an investment fund, by value of savings and investments, May 2013

Average Length of Time Consumers Hold Investments
Key points
Investors tend to keep their holdings for more than a year
Figure 44: Average length of time investments held, May 2013
High-net-worth clients more likely to save for the long term
Figure 45: Average length of time investments held, by value of savings and investments, May 2013

Consumer Attitudes Towards Saving and Investing
Key Points
A large proportion of adults are simply risk averse
Figure 46: Attitudes towards investing and investments, May 2013
Over-55s are less open to taking risks
Figure 47: Agreement with the statement ‘I can’t afford to take any risk with my money’, by age, May 2013
Time constraints prevent some adults from investing…
Figure 48: Attitudes with the statement ‘I do not have time to choose my own investment’, by collective investment ownership and intentions to purchase, May 2013
but perceptions about costs and affordability are bigger barriers
Figure 49: Attitudes towards investing and investments, by collectives ownership, May 2013
Adults with specific goals more frustrated by low interest rates
Figure 50: Agreement with the statement ‘Low interest rates have made me more interested in investment products, such as collectives and shares’, by saving and investment goals, May 2013
Figure 51: Agreement with the statement ‘Low interest rates have made me more interested in investment products, such as collectives and shares’, by saving and investment goals, May 2013 (continued)

Appendix – Market Size and Forecast
Figure 52: Best and worst case forecast of gross retail sales of unit trusts and OEICs (UK domiciled), 2013-18

Appendix – Value of Savings and Investments
Figure 53: Value of savings and investments, by demographics, May 2013
Figure 54: Value of savings and investments, by demographics, May 2013 (continued)

Appendix – Investment Portfolio
Figure 55: Ownership of savings account/cash ISAs, by demographics, May 2013
Figure 56: Ownership of company pensions, by demographics, May 2013
Figure 57: Ownership of NS&I products, by demographics, May 2013
Figure 58: Ownership of personal pensions, by demographics, May 2013
Figure 59: Ownership of equity-based investment, by demographics, May 2013
Figure 60: Ownership of individual company shares, by demographics, May 2013
Figure 61: Ownership of collectives, by demographics, May 2013
Figure 62: Ownership of investment property, by demographics, May 2013
Figure 63: Ownership of with-profits, unit-linked, money market, distribution or guaranteed investment bonds, by demographics, May 2013
Figure 64: Ownership of investment trusts, by demographics, May 2013
Figure 65: Ownership of unit trusts/OEICs, by demographics, May 2013
Figure 66: Ownership of SIPPs, by demographics, May 2013
Figure 67: Ownership of financial spread-betting accounts, by demographics, May 2013
Figure 68: Ownership of ETFs, by demographics, May 2013
Figure 69: Ownership of other savings and investments, by demographics, May 2013

Appendix – Saving and Investment Goals
Figure 70: Most important saving and investment goals, by demographics, May 2013
Figure 71: Less important saving and investment goals, by demographics, May 2013

Appendix – Influential Factors When Choosing an Investment Fund
Figure 72: Most important factors when choosing an investment fund, by demographics, May 2013
Figure 73: Less important factors when choosing an investment fund, by demographics, May 2013

Appendix – Average Length of Time Consumers Hold Investments
Figure 74: Average length of time investments held, by demographics, May 2013
Figure 75: Average length of time investments held, by demographics, May 2013 (continued)

Appendix – Consumer Attitudes Towards Saving and Investing
Figure 76: Attitudes towards investing and investments – I can’t afford to take any risks with my money, by demographics, May 2013
Figure 77: Attitudes towards investing and investments – I prefer to save/invest for the long term, by demographics, May 2013
Figure 78: Attitudes towards investing and investments – I do not have enough money to make investing worthwhile, by demographics, May 2013
Figure 79: Attitudes towards investing and investments – I can’t afford the costs and charges involved with stockmarket investments, by demographics, May 2013
Figure 80: Attitudes towards investing and investments – I prefer to make my own investment decisions than use a fund manager to invest on my behalf, by demographics, May 2013
Figure 81: Attitudes towards investing and investments – I would look for a fund manager with a proven track record when choosing an investment product, by demographics, May 2013
Figure 82: Attitudes towards investing and investments – Low interest rates have made me more interested in investment products such as collectives and shares, by demographics, May 2013
Figure 83: Attitudes towards investing and investments – I have a clear investment plan, by demographics, May 2013
Figure 84: Attitudes towards investing and investments – I do not have time to choose my own investments, by demographics, May 2013

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