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One scoop to start: Billionaire investor Bill Ackman is preparing a public listing of his hedge fund company Pershing Square Capital Management in a stock market debut that could come early next year.
And one for the diary: The FT’s Future of Asset Management Europe event takes place this week on November 25-26 at the Landmark London, with speakers including the London Stock Exchange’s Julia Hoggett and Schroders chief executive Richard Oldfield. Register here and use the code AMNL10 for a 10 per cent discount on your in-person or digital pass.
In today’s newsletter:
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Global asset management industry to hit $200tn
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FCA’s low pension allocation to UK stocks
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UK borrowing overshoots expectations
Asset management to hit $200tn
Some positive news for the global fund management industry: it is on track to reach $200tn of assets by 2030, with private markets poised to account for more than half of revenues, according to consultancy PwC.
A new report by the firm based on 300 asset managers, institutional investors and distributors around the world has found that revenues generated by private markets will reach $432bn within five years, writes Emma Dunkley.
More broadly, the amount managed by the global fund industry is expected to grow by more than $60tn by 2030, up from $139tn in 2024.
Albertha Charles, global asset and wealth management leader at PwC UK, said that the findings assume that global inflation will continue to come down along with interest rates, which would be likely to encourage investors to shift cash savings into investment.
Despite the growth opportunities, the report found that asset managers’ profits continue to come under strain due to increasing competition, a race to lower fees, and costs.
Over the past five years 89 per cent of asset managers reported profitability pressure, the survey found. According to PwC’s analysis, profit relative to assets under management has fallen 19 per cent since 2018 and is forecast to decline 9 per cent by 2030.
“We expect private markets to anchor a lot of the growth in assets under management,” Charles said.
“But even though there is a growth opportunity in accruing assets and generating revenues, not everyone is going to benefit. Those who will are the ones that look to reinvent their business models and get clarity on where they bring unique value.”
FCA pension’s small UK stock holding
The Financial Conduct Authority’s defined benefit pension scheme has just 4 per cent of its equity portfolio invested in UK stocks, far lower than its private sector peers, despite urging others to invest more at home.
The £556.9mn pension scheme, which is closed to new members, is mostly invested in debt securities but only £1.8mn of its £45mn listed equity portfolio is allocated to the UK, according to its annual report.
That compares with an average allocation of about 25 per cent across private sector DB funds, according to research by the Pensions Policy Institute last year.
This year, using a revised methodology, the PPI found the UK made up 12 per cent of equities. Most private sector DB funds are also closed to new members, write Ramsay Hodgson and Mary McDougall.
The low allocation of the regulator’s pension scheme to UK stocks comes as the government and the FCA itself have been trying to encourage pension fund managers to invest more in their domestic market.
“This is a clear example of do as I say rather than I do,” said Charles Hall, head of research at Peel Hunt.
The financial watchdog also has a £1.57bn defined contribution scheme for its staff, where UK equity exposure is about 3 per cent of total assets. The UK stock market makes up about 3.5 per cent of global equities.
The regulator’s scheme is run by a separate legal entity. Most of its trustees, who are advised by pensions consultants, are FCA employees.
The FCA said: “The trustees of the FCA Pension Plan are independent of the FCA. The trustees aim to maximise returns whilst managing and maintaining investment risk at an appropriate level.”
Chart of the week
Worse than expected government borrowing numbers, a sharp slowdown in private sector activity and a dive in retail sales have underscored the fragile state of the UK economy less than a week before chancellor Rachel Reeves’ tax-raising Budget.
Friday’s report from the Office for National Statistics showed public sector borrowing was £17.4bn last month, compared with expectations of £15bn in a Reuters poll of analysts, write Sam Fleming and Valentina Romei.
Overall, the Treasury has borrowed £116.8bn for the seven months of the fiscal year to date, nearly £10bn more than the last forecast by the Office for Budget Responsibility.
A separate release from the ONS on Friday showed that British retail sales fell 1.1 per cent in October, much worse than expected.
Ruth Gregory at Capital Economics said the figures, the last big economic releases before the Budget, “paint a pretty grim picture” and noted the risk that “higher taxes in the Budget restrain retail spending over the crucial festive period and going into next year”.
A GfK consumer confidence published earlier on Friday showed a fall of 2 points to minus 19 in October, while business activity barely grew in November, according to the S&P Global/Cips flash UK PMI.
The chancellor is set to increase taxes further in Wednesday’s Budget as she seeks to fill a fiscal hole estimated at between £20bn and £30bn.
Five unmissable stories this week
The number of pensioners facing poverty in retirement could more than double if the so-called “triple lock” were removed and state pension rises were linked only to consumer prices.
Gordon Singer, the London-based co-managing partner of US hedge fund Elliott Management, unsuccessfully tried to donate to Robert Jenrick during his failed run for the Conservative party leadership last November.
Blue Owl has called off a merger between two of its private credit funds after the FT revealed how the move risked inflicting steep losses on investors in one of the vehicles.
California’s state pension fund has adopted a new methodology to analyse asset allocations, performance and risk in a governance overhaul that could have market implications for how it invests its $556bn in assets.
The UK’s Investment Association has written to the Treasury to warn against a possible overhaul of the Isa regime, arguing that there are better ways to encourage people to invest.
And finally
Southwold, 1937 © Aberdeen City Council (Aberdeen Archives, Gallery & Museums)
Love & Landscape showcases the work of Sir Stanley Spencer, exploring his connection with the Suffolk landscape alongside his complex personal life, tracing his formative experiences and how they informed his sometimes controversial works.
Gainsborough’s House, Sudbury, until March 22
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