There are around 4,700 funds across 56 Investment Association (IA) sectors. The UK All Companies sector is relatively modest in size with about 230 constituents (including approximately 50 passive vehicles – ETFs were added from April 2021). To be included in this sector, funds need to have at least 80% of their assets invested in UK equities and must have the primary objective of achieving capital growth. The IA has separate sectors for UK smaller companies and UK equity income.
The largest 20 funds in the UK All Companies category account for £107bn of assets or around 59% of the total funds under management within the sector. At the other end of the spectrum, there is a longish tail of approximately 45 sub-scale funds that are individually less than £50m in size, accounting for less than 1% of the assets.
Funds with lower levels of assets may bare a higher total cost of investment as fixed costs are spread across fewer assets and also could be of limited appeal to larger quasi-institutional investors who may apply limits on their level of ownership.
Over recent years, the UK stockmarket has been out of favour with investors due to a combination of factors such as Brexit and political instability. Covid supercharged a new technology industrial revolution, which drew capital to the US equity markets and away from the perceived ‘old economy’ UK and European indices.
This lack of demand for new and secondary equity issuance has meant the UK market, as an element of global indices, has fallen from about 7% to 3% over the past 10 years. This reduces accounting for the natural flow of capital from investors, especially in a world where passive investment strategies increasingly become the vehicles of choice.
In 2024, we saw continued and heightened geopolitical tensions as half of the global population went to the polls to vote, and inflation and interest rates defied expectations by staying higher for longer.
While much later than many anticipated, the US Federal Reserve, the European Central Bank and the Bank of England, all began lowering rates
Read the rest of this article, plus Amaya Assan’s funds to watch by assets under management, three-year performance and newcomers in March’s Portfolio Adviser magazine
