Fund management activities revenue is forecast to rise at a compound annual rate of 0.7% over the five years through 2024-25 to £28.2 billion, including estimated growth of 7.8% in 2024-25. Fund managers have had to navigate turbulent markets in recent years, hit by aggressive monetary policy, geopolitical tensions and muted economic growth. Such uncertainty made investors antsy, triggering volatile capital flows and creating unstable fee income. Economic uncertainty surrounding markets amid the threat of a recession, the cost-of-living squeeze and the gilt crisis in 2022-23 all shook key investor segments, causing the first net outflow in funding in 2022 since data was first recorded. Despite conditions remaining bleak in 2023-24, financial markets made a slow recovery, with both bond and stock markets benefitting from the expectation of interest rate cuts, triggering a rally at the tail-end of the year. However, amid fierce price competition and falling fees, this wasn’t enough to offset the drop in revenue during 2023-24. Capital markets are set to perform well in 2024-25 thanks to further interest rate cuts and optimistic growth prospects supporting investment activity, driving up profit. However, fund managers exposed to US markets have seen hefty declines at the start of 2025, hit by Trump’s erratic tariff policies, which incited fears of a recession. Revenue is expected to grow at a compound annual rate of 4.4% over the five years through 2029-30 to £35 billion. Capital markets will continue to grow in 2025-26, propped up by the prospect of further rate cuts. However, equity remains vulnerable because soaring stock valuations seen in recent years can lead to a severe price correction if any negative news hits markets, hurting revenue growth. Already proving a useful tool for fund managers, AI will continue to gain momentum in the coming years, especially among smaller managers looking to improve data analytics capabilities and client offerings. Fund managers will also have to navigate the changing perceptions of ESG investments, which, although hitting the headlines over recent years, are beginning to lose the interest of investors due to their lower returns. While growth in the domestic economy may be slow in the coming years, investment companies will take advantage of growing opportunities in expanding markets, despite facing fiercer competition from foreign funds.