(1/n) In 1963, >50% of UK stock market was held by UK individuals.

In the early 90s, >50% was held by UK pension funds and insurance companies.

Since at least 2012, >50% has been held by overseas investors.

Why and what does it mean for investing?

https://www.schroders.com/en/insights/economics/global-britain-should-the-dramatic-shift-in-ownership-of-the-uk-stock-market-be-feared-or-cheered/

(2/n) these are global trends not U.K. specific: Soaring internationalisation, marginalisation of the individual, pension funds have been and gone

Pension funds reduced home bias, diversified more into alts (real estate, hedge funds), and moved into bonds in a big way (liability management/derisking).

Anyone who thinks DB pensions will invest more in UK plc if change regs or valuation methods is misguided. Ship has sailed

But most overseas investors are institutional inv as they’ve all invested more global too. So rather than shift from UK individ-UK pen/insurance-overseas inv, it is really one shift:

From individuals to institutions

Question then is whether this is good or bad?

In past individual ownership was concentrated in the wealthy few. Institutionalisation has arguably been the biggest force in democratisation of access to stock market

Also, while highly engaged individuals do exist, institutional investors are much more likely exercise responsibilities as shareholders e.g. voting.

Voting better than not voting but not end of story:

-over reliance on third party proxy voting advisors?
-engagement v. important

Doesn’t mean individs not engaged-they are! Our survey shows vast majority consider sustainability when choosing investment-but delegate day to day responsibilities to asset manager the entrust on their behalf.

And at end of the day, ultimate beneficiary of all these institutional investors is often an individual!

Individs may be several steps removed from those managing money on their behalf but that shouldn’t prevent them from holding those people to account. https://www.schroders.com/en/insights/economics/global-britain-should-the-dramatic-shift-in-ownership-of-the-uk-stock-market-be-feared-or-cheered/

@MerrynSW @John_Stepek @_simonlambert @iancowie @awealthofcs this thread is probably right up your street!