Collective Investments - UK - November 2007

Table of Contents

• Issues in the Market
• Main issues
• Product background and definitions
• Simplifying the market
• Risk profile is key
• Specific types of Collective Investments
• Market in Brief
• Key points
• 2006 -- a good year for the fund managers...
  • Figure 1: Gross retail and ISA sales of collective investments, 1997-2006
• ...but there are problems ahead
• Education and advice to come to the fore
• Sales follow the equities market
  • Figure 2: Net collective investments and ISA sales against the FSTE 100 index, 1992-2007
• Product penetration remains low
  • Figure 3: Consumer holdings of selected investment products, June 2007
• Little appetite for risk
  • Figure 4: Consumer appetite for risk, June 2007
• Competitor products could be hit by the credit crunch
• Internal Market Environment
• Key points
• Market performance drives sales...
  • Figure 5: FTSE 100 monthly close, 1982-2007
• ...but still little appetite for risk
  • Figure 6: Barriers to investing in shares and other stock market based investments, September 2007
• The FSA and the Retail Distribution Review...
• ...spells yet more change for the investment industry
• Hopes for more transparent charging structures
• More demanding environment for advisors
• Green funds potentially over inflated
• Star managers add personality to the investment market
• Emerging markets to engage consumer interest?
• Broader Market Environment
• Key points
• An ageing population
  • Figure 7: UK population trends by age group, 2004-29
  s
• Attitudes towards saving
  • Figure 8: PDI, consumer expenditure and the savings ratio, 1997-2006
• Rising interest rates may keep people in non equity and bond savings
  • Figure 9: Bank of England base rate, 1997-2007
• Consumer confidence is ebbing
  • Figure 10: Rolling monthly, three-monthly, and yearly UK consumer confidence indices*, Jan 2000-Sept 2007
• Marked shift in saving intentions
  • Figure 11: Intentions to save and spend in the next 12 months*, Jan 2001-Sept 2007
• Competitive Context
• Key points
• Buy-to-let -- are the wheels about to come off?
  • Figure 12: Number and value of buy-to-let mortgages outstanding, 2000-07 (H1)
• A-day boosts sale of pensions
  • Figure 13: Individual pension sales, 2001-06
• ISA sales continue to grow, but average subscriptions fall
  • Figure 14: Number of new mini cash ISAs and amounts subscribed during the year, 1999/2000-2006/07
• Strengths and Weaknesses in the Market
• Strengths
• Weaknesses
• Market Size and Forecast
• Key points
• Sales approach £60 billion in 2006...
  • Figure 15: Gross retail and ISA sales, December 1997-December 2006
• ...but net sales to fall back in 2007?
  • Figure 16: Net retail and ISA sales, December 1997-December 2007
• How long before churn becomes a major issue?
• New products to slow the investment merry-go-round?
• Strong growth in assets under management
  • Figure 17: UK domiciled funds under management by asset class, 1997-2006
• Retail sales still centre around the ISA season
  • Figure 18: Gross and net ISA sales, July 2005-June 2007
  • Figure 19: Market value of funds in ISAs, 2006-07
• Forecast
  • Figure 20: Gross retail sales of collective investments, 2002-12
• Will the ' boom' turn into a ' pop' ?
• Background factors less favourable
• Market Share
• Key points
• Retail funds under management
  • Figure 21: Retail funds under management, by fund manager, August 2007
• Halifax tops the ISA tables
  • Figure 22: UK ISA funds under management, August 2007
• Companies and Products
• Key points
• Product sales reflect wider market conditions
  • Figure 23: Sector trend within collective investments, 2001-07
• Fidelity is longer the lone front runner
  • Figure 24: Fidelity and Invesco Perpetual fund assets under management, October 2005-August 2007
• Ratings provide key point of differentiation
• Brand Communication and Promotion
• Key points
• Press spend continues to dominate
  • Figure 25: Collective investments, adspend by media type, 2003-07(June)
  • Figure 26: Adspend by company, 2002-06
• Current themes
• Channels to Market
• Key points
• Intermediaries see the only real growth
  • Figure 27: Retail distribution of collective investments, 1997-2006
• Direct sales to the fore in the ISA market
  • Figure 28: Collective investment ISA sales distribution, 1999-2006
• Fund supermarkets take a growing share of the market
• Platforms
• The Consumer -- Product Ownership
• Key points
• Collective investments a niche product
  • Figure 29: Investment ownership, June 2007
• Money follows money
  • Figure 30: Investment ownership, by gender and socio-economic group, June 2007
• Implications and opportunities
• A missed opportunity?
• How to tempt the young to save?
• Taking the longer view
  • Figure 31: Investment ownership, by lifestage, June 2007
• ...and capitalising on the Child Trust Fund
• Low-cost, low-hassle ISAs?
• Owning and renting
• Take a punt on the Internet...
• ... or just stick to the financial pages?
  • Figure 32: Investment ownership, by daily newspaper readership, June 2007
• Extending the good grocery brand
• The Consumer -- Targeting Opportunities
• Key points
• It' s all about the guarantees
  • Figure 41: Important factors for long term investing, June 2007
• Fear of loss
  • Figure 42: Most important factors for long term investing, by socio-demographic group, June 2007
• Implications and opportunities
• Affluent look for tax benefits
• Implications and opportunities
• Other
• Returns come to the fore for the well-informed
  • Figure 43: Factors people consider important when thinking about saving or investing money over a longer period of time, by number of sources of advice used, June 2007
• Implications and opportunities
• 1 IFA Informed (15% of respondents)
• 2 Bank Backing (26% of respondents)
• 3 Non-investors (39% of respondents)
• 4 Friend and Family Fortunes (9% of respondents)
• 5 All Available Resources (10% of respondents)
• Taking a punt on the IFA
  • Figure 44: Target groups by attitudes towards saving and investing, July 2007
• Implications and opportunities
  • Figure 45: Target groups, by number of sources of advice used, June 2007
• Implications and opportunities
• Age/lifestage
• Socio-economic
• Other
• Detailed Demographics
  • Figure 46: Most popular source of financial advice, by socio-demographic group, June 2007
  • Figure 47: Next most popular attitudes towards sources of advice, by socio-demographic group, June 2007
  • Figure 48: Target group demographics, June 2007
  • Figure 49: Investment ownership, by age, June 2007
  • Figure 50: Investment ownership, by income groups, June 2007
  • Figure 51: Investment ownership, by tenure, June 2007
  • Figure 52: Investment ownership, by region, June 2007
  • Figure 53: Investment ownership, by technology, June 2007
  • Figure 54: Investment ownership, by Internet usage, June 2007
  • Figure 55: Investment ownership, by supermarket usage, June 2007
  • Figure 56: Investment ownership, by age/socio-economic groups, June 2007
• Sources of advice
  • Figure 57: Most popular source of financial advice, by socio-demographic group, June 2007
  • Figure 58: Attitudes to risk, 2007
  • Figure 59: Next most important factors for long term investing, by socio-demographic group, June 2007
  • Figure 60: Influencing investment decisions, 2007