UK share ownership remains an ongoing issue and the Office for National Statistics released its biennial update on who owns them and the previous editions are available online.
The numbers in the latest release are from the end of 2024 and have naturally generated some headlines about the low value of domestic shareholders, but I had a look back 10 years to 2014 to see how much had changed.
The value of all the shares traded on the London Stock Exchange was £2.54 trillion compared with £1.73 trillion at the end of 2014 – an increase of nearly 50%. Within this foreign ownership has increased by five percentage points from 53.8% to 58.8%. While it is true that insurance companies and pension funds are two of the more significant reductions on the other side of this, falling 4.7% and 1.4%. It is worth noting the numbers were already small even in 2014 at 5.9% and 3.0% respectively but this represents a decrease of around 80% and 50% of their starting amounts.
I think this is well documented, but apart from overseas ownership the other big gainer was “other financial institutions” who increased by 5.3 percentage points to 12.4%. This includes the likes of Hawksmoor who may also be managing your SIPP or other pension fund, and this may explain where some of the pension fund reductions went. Pension funds have continued to reduce their UK allocations as a percentage of the fund, but some of it also seems to have been recategorized.
Incidentally, the other big seller of UK shares was the UK government who went from 2.9% to almost nothing – 0.2%. Much of this relates to the post GFC sales of bank shares which mostly happened in this period.
Unit trusts and investment trusts between them were 10.8% of the market, now down to 9.1% with investment trust ownership in particular falling by over 60%.
The report also splits out holdings between the FTSE 100 and “other”, which I am going to take to mean small and mid-cap companies.
If we go back to 2014 the split was 80-20 between large and small while in 2024 this has become 60-40. This is out of line with the market cap split between the two which is more like 85-15 because the ONS is looking at total share ownership rather than market cap.
This means small and mid-cap share ownership has doubled in the last ten years and there are increases almost across the board. That seems counterintuitive to me but is what the survey says and may also be partly explained by the ONS methodology.
Small and mid-cap companies are most popular with private retail owners who have over half of their holdings outside the FTSE 100, up from just over 35% in 2014.
The other thing private retail likes is an investment trust. Apart from foreign owners they are the largest holders in the survey with 22.9% of the total, although this is down nearly half from over 40% in 2014 – it’s mostly overseas investors who they have sold to.
The survey finishes with some very long-term data. What it shows very broadly is the rotation of ownership from pensions and insurance companies who were 50% or so up to the mid-late 1990s when it started to decline and rotate into a bigger share of foreign ownership, which is now nearly 60% of the total.
The biggest share of this overseas holding by far is US investors. This will be at least partly a function of them having the most money, but I think it is still worth asking why they seem to find the UK market more attractive than we do.
Many of the suggestions I hear about encouraging interest in the UK market – abolishing stamp duty for example or forcing minimum pension fund allocations in the UK – overseas investors face the same issues, they still pay stamp duty and there will be no mandated allocation to the UK at a US pension fund, but this doesn’t seem to put them off.
Robert Fullerton – Senior Research Analyst
FPC26688
All charts and data sourced from FactSet
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