The annual IMA asset management survey points to a slump in interest in UK equities as investors look further afield for returns.
Retail investors continued to return to equity funds in 2010, but the trend was almost entirely driven by non-UK equity inflows, the IMA said.
Non-UK equity funds have outsold UK equity funds in five out of the last six years, compared to only twice in the thirteen years before that. But 2010 saw the gap between the two sectors widen significantly.
Net retail investment into equity funds of £6.8bn was almost wholly driven by non-UK equity net retail sales. Net retail sales of UK equity funds totalled just £52m, down from £2bn in 2009.
UK equities now represent just 43% of total equities managed in the UK, compared to 60% four years ago. One respondent to the survey said the trend was a key concern for active managers.
"It is now about the generation of a certain amount of return, regardless of where you can source it, and that leads to big changes," they said.
"UK equity as a share of equity in portfolios is disappearing. I still believe there will be active management, but it will be much broader."
Retail sales in 2010 across all asset classes stood at £29.5bn, slightly below the record level of £29.8bn seen in 2009.
The annual study also revealed a growing fear of funds moving offshore, despite the UK asset management industry enjoying year-on-year AUM growth of 17% in 2010.
UK asset managers now have £3.9trn in assets under management. The proportion managed in the UK by IMA members for overseas-domiciled funds is estimated to stand at £617bn, or 16% of total assets, a 20% year-on-year rise.
While the number of funds domiciled in Ireland and Luxembourg has increased by an average of 7% and 6% per year respectively over the past decade, the UK remains "virtually static", the IMA said.
"Over the last few years we have tracked growing concern that the many advantages enjoyed by the UK as a location for an investment management business may be eroding. We heard this even more strongly this year," the IMA said.
"Just as mutual fund domiciles have migrated to Dublin and Luxembourg, so we may see other moves over time", it said IMA , pointing to uncertainty over the future direction of regulation as a factor.
Some 70% of respondents said the current regulatory environment is a key area of concern, with a lack of adequate international coordination among the main issues.
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