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Equity Investing - UK - September 2016

Published By :

Mintel

Published Date : Sep 2016

Category :

Banking

No. of Pages : N/A

Low savings rates and new technology should make investing in equities an attractive proposition for those who have become disillusioned with the cash savings market. However, ownership across the adult population remains low and a risk-averse attitude continues to hamper the uptake of investment products, with recent market volatility off-putting for those who lack investment experience. Helping customers to navigate these concerns through education and access to advice will be crucial in expanding the pool of investors.

Table of Contents

OVERVIEW
What you need to know
Product definitions

EXECUTIVE SUMMARY
The market
Gross sales up but net sales down sharply following market volatility
Only a minority own investment products
Figure 1: Investment products owned, by investment type, July 2016
Sales volumes have stabilised after RDR
Rise in non-advised sales
Figure 2: Advised and non-advised new sales based upon sales data of bonds, stocks and shares ISAs, trusts and OEICs, 2011-15
UK fund platforms account for 46% of new sales
Figure 3: Gross retail sales, by distribution channel, 2015
Companies and brands
Standard Life and Invesco Perpetual top the asset manager ranking by FUM
Figure 4: Top 10 asset managers, by total retail funds under management, as of March 2016
Mergers and acquisitions
The consumer
51% of consumers are uncomfortable with investment risk
Limited appetite for investment products
Figure 5: Consumer investment plans over the next 12 months, July 2016
Lack of investable assets puts consumers off
Figure 6: Consumer reasons for not owning, or wanting to own investment products, July 2016
Online platforms popular among investors
Figure 7: Channels consumers expect to use to invest, July 2016
Low interest rates boost investment opportunities
Figure 8: Consumer agreement with statements regarding investing, July 2016
What we think

ISSUES AND INSIGHTS
Generation X – A lost generation of investors
The facts
The implications
Ethical and green funds provide opportunity to engage with young investors
The facts
The implications

THE MARKET – WHAT YOU NEED TO KNOW
Gross sales up but net sales down sharply following market volatility
Only a minority own investment products
Sales volumes have stabilised after RDR
Rise in non-advised sales
UK fund platforms account for 46% of new sales

MARKET SIZE AND FORECAST
Investment growth slows
Figure 9: Value of gross and net retail sales, 2012-15
67% of the UK have £30,000 or less in savings or investments
Figure 10: Value of consumers’ savings and investments, July 2016
Only 25% of adults own an investment product
Figure 11: Investment products owned, by investment type, July 2016
Market forecast
Figure 12: Forecast of the value of new gross sales, 2011-21
Figure 13: Forecast of the value of new gross sales, 2011-21
Brexit impact on investments
Investor behaviour during the last recession
Figure 14: Alternative market scenarios for the post-Brexit investment market, at current prices, 2016-21
Figure 15: Alternative market scenarios for the post Brexit investment market, at current prices, 2016-21
Very little has changed for non-investors
Forecast methodology

MARKET SEGMENTATION
Equity investing comes in many forms
Mixed growth among asset types
Figure 16: Net retail sales of funds, by asset class, 2011-15
Popularity of trusts and OEICs has increased
Figure 17: New retail investment sales, 2011-15

CHANNELS TO MARKET
Main channels
Retail sales dominated by fund platforms
Figure 18: Gross retail sales, by distribution channel, 2015
Figure 19: Gross retail sales, by distributions channel, 2011-15
Sharp drop in advised sales
Figure 20: Advised and non-advised new sales based upon sales data of bonds, stocks and shares ISAs, trusts and OEICs, 2011-15

MARKET DRIVERS
Low interest rates lead to increased interest in investments…
Figure 21: Bank of England bank base rate, January 2000-July 2016
…but consumers continue to rely on cash savings products
Brexit creates some opportunities but also undermines investor confidence
Pension reforms increase investment opportunities

REGULATORY AND LEGISLATIVE CHANGES
MiFID II on the horizon
FCA publishes its findings on the advice market
Robo-advice unit gets the green light
Countdown to PRIIPs

COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Mergers and acquisitions
Asset managers reassess pricing strategies
New environmentally friendly funds announced

MARKET SHARE
Standard Life tops the table for retail funds under management
Figure 22: Top 10 asset managers, by total retail funds under management, as of March 2016

COMPETITIVE STRATEGIES
Merger and acquisition activity
Cofunds to be sold to AEGON
AXA’s Elevate sale
Asset managers reassess pricing strategies
M&G cut funds for direct investors
Ballie Gifford cuts investment trust fees
Speculation about zero-fee funds
Ethical investing developments
Jupiter launches environmentally friendly fund
Morningstar launches ESG ratings
Third-party apps to increase investment opportunities
Aviva aims to make Britain’s savers smarter

ADVERTISING AND MARKETING ACTIVITY
Aviva considerably increases adspend
Figure 23: Total above-the-line, online display and direct mail investment-related adspend, by advertiser, 2011/12-2015/16
Majority of adspend attributed to stocks and shares ISAs
Figure 24: Total above-the-line, online display and direct mail advertising expenditure on equity investment products, 2011/12-2015/16
Press advertisements dominate the market
Figure 25: Total above-the-line advertising, by media type, 2015/16
Nielsen Ad Intel coverage

THE CONSUMER – WHAT YOU NEED TO KNOW
51% are uncomfortable with taking risks
Vast majority of consumers are uncomfortable with investment risk
Only around a quarter of adults own an investment product
Lack of investable assets puts consumers off
Online platforms popular among investors
Low interest rates boost investment opportunities

INVESTABLE ASSETS AND CONSUMER ATTITUDES TOWARDS INVESTMENT RISK
A third of consumers have £500 or less in savings or assets
Figure 26: Value of consumers’ savings and investments, July 2016
Many consumers uncomfortable with investment risk
Figure 27: Consumers’ comfort with taking risks with savings, July 2016
Appetite for risk decreases with age
Figure 28: Consumers’ comfort with investment risk, by age, July 2016
Amount of savings and investment affects risk appetite
Figure 29: Consumers’ comfort with investment risk, by consumers’ savings and investments, July 2016

CURRENT AND FUTURE OWNERSHIP OF INVESTMENT PRODUCTS
Majority of consumers do not own an investment product
Figure 30: Investment products owned, by investment type, July 2016
Majority of consumers only own one investment product
Figure 31: Number of investment products owned, repertoire analysis, July 2016
Generation X least likely to own an investment product
Figure 32: Consumers who own an investment, by generation, July 2016
82% of consumers do not intend to take out an investment product in the next 12 months
Figure 33: Consumer investment plans over the next 12 months, July 2016

BARRIERS TO INVESTING
Lack of investable assets are a major barrier
Figure 34: Consumer reasons for not owning, or wanting to own investment products, July 2016
One in 10 are put off by fees and charges
A third do not wish to take any risks with their savings
Trust in investment companies lowest amongst older demographics
Figure 35: Consumer agreement with the statement I do not trust investment companies’, by age, July 2016

REASONS FOR INVESTING
Motivations to save will influence how people approach investments
Low rates provide motivation for older investors
Figure 36: Consumer reasons for investing, July 2016
Almost a fifth of consumers invest for fun
Figure 37: Consumer reasons for investing, by age, July 2016

METHODS OF ARRANGING INVESTMENTS
High street banks/building societies most popular option for arranging investments
Figure 38: Channels consumers expect to use to invest, July 2016
Online platforms prove a popular option among older Millennials
Direct channels appeal to more than a third of potential investors

CONSUMER ATTITUDES TOWARDS INVESTING
Fall in interest rates boosts interest in investing
Figure 39: Consumer agreement with statements regarding investing, July 2016
Many consider ethical options but fail to act on it

CONSUMER ATTITUDES TOWARDS FEES
Direct investing seen as a cheaper option
Figure 40: Consumer agreement with statements regarding investment fees, July 2016
Consumers are unwilling to pay for actively managed funds
Comparing fees causes a headache for consumers

APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology

APPENDIX – MARKET SIZE AND FORECAST
Figure 41: Forecast of the value of new gross sales, 2016-21
Forecast methodology

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