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EQUITY INVESTING - UK - SEPTEMBER 2018

Published By :

Mintel

Published Date : Sep 2018

Category :

Banking

No. of Pages : N/A

2017 was a bumper year for the equity investing market, but this is unlikely to be repeated in 2018, with Brexit looming. Competitive pressures are growing, even among the once-niche online platform providers, and the flow of new customers is inhibited by low levels of investable assets. Ethical and micro-investing show potential to expand the market and reach the next generation of investors.

Table of contents
OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
2017 proves to be a record year for net fund sales
Figure 1: Forecast of the value of gross retail sales, 2013-23
Intermediaries increase their share of distribution
Figure 2: Advised and non-advised new sales based upon sales data of bonds, stocks and shares ISAs, trusts and OEICs, 2013-17 H1
Low investable assets suppressing flow of new investors
Figure 3: Household savings ratio, 2008-17
Regulatory changes cause uncertainty
Companies and brands
M&G remains top of unchanged company rankings
Figure 4: Top 10 asset managers, by total retail funds under management, March 2017 and March 2018
Platform competition hots up while costs and charges get strategic
The consumer
Almost half of people with savings or investments are uncomfortable with risk
Figure 5: Level of comfort taking risks with savings, aggregated, June 2018
Stock-picking remains among most popular approaches
Figure 6: Investment product ownership, June 2018
Only 12% of non-investors intend to invest in the next year
Figure 7: Intentions to invest, June 2018
Online investing has become the firm favourite among investors
Figure 8: Channels used to invest, June 2018
Investors show impressive confidence in decision-making
Figure 9: Attitudes towards investing, June 2018
More than a third say they would be likely to consider micro-investing, rising to over half of Millennials
Figure 10: Consideration of micro-investing, June 2018
What we think
ISSUES AND INSIGHTS
Micro-investing could hold the key to building a pipeline of new investors for the future
The facts
The implications
Ethical investing could become the new normal
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
2017 proves to be a record year for net fund sales
Net retail sales bounce back dramatically in 2017
Intermediaries increase their share of distribution
Low savings ratio and low investable assets
Regulatory changes cause uncertainty
MARKET SIZE AND FORECAST
2017 proves to be a record year for net fund sales
Figure 11: Value of gross and net retail sales, 2013-18
Growth in guaranteed and with-profit bonds slows
Figure 12: Unit-linked, guaranteed and with-profit bonds, 2014-17
Two in five UK adults own an investment product
Figure 13: Investment product ownership, June 2018
Gross fund sales expected to grow in post-Brexit environment
Figure 14: Forecast of the value of gross retail sales, 2013-23
Figure 15: Forecast of the value of gross retail sales, at current prices, 2013-23
Forecast methodology
MARKET SEGMENTATION
Net retail sales bounce back dramatically in 2017
Figure 16: Net retail sales of funds, by asset class, 2013-17
FCA new sales data reveals strong growth in with-profit bonds
Figure 17: New retail investment sales, by investment product type, 2012-17 H1
Value of stocks and shares ISAs recovered in 2016/17, while cash fell by a third
Figure 18: Number of ISAs and amounts subscribed to each component, 2008/09-2016/17*
Figure 19: Average subscription per account, 2012/13-2016/17*
CHANNELS TO MARKET
Intermediaries increase their share of distribution
Figure 20: Gross retail sales, by distribution channel, 2017
Figure 21: Gross retail sales, by distribution channel, 2013-17
FCA data shows new non-advised sales made progress in early 2017
Figure 22: Advised and non-advised new sales based upon sales data of bonds, stocks and shares ISAs, trusts and OEICs, 2013-17 H1
Seven in 10 usually use online channels to invest
Figure 23: Channels used to invest, June 2018
MARKET DRIVERS
Interest rates begin to rise
Figure 24: Effective interest rates on household deposit balances versus official bank base rate, January 2010-June 2018
A historic low savings ratio…
Figure 25: Household savings ratio, 2008-17
…means low levels of investable assets
Figure 26: Value of people’s savings and investments, June 2018
79% of people have savings in cash
Figure 27: Ownership of cash saving products, February 2018
REGULATORY AND LEGISLATIVE CHANGES
Firms continue to count the cost of implementing new legislation
EU MiFID II
EU PRIIPs
FCA SM&CR
FCA reveals expectations for discretionary management platforms
FCA publishes interim report on investment platforms
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
M&G remains top of unchanged company rankings
Platforms lock horns while costs and charges form a key battleground
Providers look to traditional media for awareness
MARKET SHARE
No change in ranking among top 10 asset managers
Figure 28: Top 10 asset managers, by total retail funds under management, March 2017 and March 2018
COMPETITIVE STRATEGIES
Competition hots up among online investment platforms
Nutmeg
Moneyfarm
Wealthsimple
Scalable Capital
Wealthify
Costs and charges becoming a key strategic point of difference
ADVERTISING AND MARKETING ACTIVITY
Providers look to traditional media for awareness
Figure 29: Total above-the-line, online display and direct mail advertising expenditure on investment products, by media type, 2015/16-2017/18*
Santander and Fidelity continue to dominate adspend
Figure 30: Total above-the-line, online display and direct mail advertising expenditure on investment products, by advertiser, 2015/16-2017/18*
Search Engine Optimisation terms have been saturated by competition
Nielsen Ad Intel coverage
THE CONSUMER – WHAT YOU NEED TO KNOW
Almost half of people with savings or investments are uncomfortable with risk
Stock-picking remains among most popular approaches
Only 12% of non-investors intend to invest in the next year
Online investing has become the firm favourite among investors
Investors show impressive confidence in decision-making
More than a third say they would be likely to consider micro-investing
RISK SENSITIVITY AND INVESTABLE ASSETS
Almost half of people with savings or investments are uncomfortable with risk
Figure 31: Level of comfort taking risks with savings, aggregated, June 2018
Figure 32: Level of comfort taking risks with savings, June 2018
Low investable assets means weak incentive to accept investment risk
Figure 33: Level of investable assets, June 2018
People more likely to amass investable assets as they age
Figure 34: Level of investable assets, by generation, June 2018
INVESTMENT PRODUCT OWNERSHIP
Stock-picking remains among most popular approaches
Figure 35: Investment product ownership, June 2018
Most investors have only one investment product
Figure 36: Number of investment products owned, June 2018
Figure 37: Investment products owned, by number of investment products owned, June 2018
Women significantly less likely to have an investment product
Figure 38: Investment product ownership, by gender, June 2018
INTENTIONS TO INVEST
Most non-investors don’t intend to start in the next year
Figure 39: Intentions to invest, June 2018
Under-25s have good intentions but may encounter barriers
Figure 40: Intentions to invest, by age, June 2018
CHANNELS TO INVESTING
Online investing has become the firm favourite among investors
Figure 41: Channels used to invest, June 2018
Younger generations set to turn investing online into the new normal
Figure 42: Channels used to invest, by generation, June 2018
ATTITUDES TOWARDS INVESTING
Investors show impressive confidence in decision-making
Figure 43: Attitudes towards investing, June 2018
Younger investors have greater interest in ethical investing
Figure 44: Agreement with selected attitudes towards investing, by age, June 2018
84% of 25-34-year-olds feel confident making investment decisions
Figure 45: Agreement with selected attitudes towards investing, by age, June 2018
ATTITUDES TOWARDS MICRO-INVESTING
More than a third say they would be likely to consider micro-investing…
Figure 46: Consideration of micro-investing, June 2018
…rising to more than half of Millennials
Figure 47: Consideration of micro-investing, by generation, June 2018
Micro-investing can bring new investors to the market
Figure 48: Consideration of micro-investing, by likelihood to invest in the next 12 months, June 2018
Low charges must match low contributions when micro-investing
Figure 49: Important factors when choosing a micro-investing service, June 2018
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Figure 50: Forecast of the value of new gross sales, 2018-23
Forecast methodology

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