By GlobalData Financial Services


Regardless of high volatility, 2016 was a great year for UK asset managers. UK fund managers clearly have been doing good job, delivering positive returns and growing assets in uncertain times. This will not be unnoticed by investors.

According to GlobalData’s UK Retail Savings and Investments Analytics, UK retail investors’ holdings in mutual funds (including both investment and unit trusts) reached all-time highs and stood at £629.2bn as of December 2016.

UK fund managers succeeded in growing their funds under management despite the fact that they had experienced difficulties attracting new clients. In fact, the value of net inflows (difference between newly invested money and withdrawals) was just over £10.5m in 2016, which is lowest since financial crisis. Flows to funds investing in equities, which constitute more than a half of UK mutual funds market, were even negative.

This trend is likely to overturn, though. While interest rates in banks have been falling, the inflation rate jumped to 1.8% (highest since June 2014), further decreasing real returns from deposits. UK savers will be looking for alternatives, and well-performing funds will attract their attention.