The ownership of UK plc is continuing to shift overseas.
Welcome to a small -- but wealthy -- minority. According to a report published this week by the Office for National Statistics, private individuals own just 10.2% of all UK quoted shares.
Even so, that adds up to an eye-watering amount. The survey -- based on data extracted from the Stock Exchange's CREST settlement system -- related to holdings as at 31 December 2008, when the overall UK stock market was worth about £1,160 billion.
So private individuals' holdings then totalled a hefty £118 billion -- and of course, the market has since risen by around 25%, boosting valuations even higher. What's more, the figure excludes individuals' ownership of UK shares through unit trusts, pension funds, investment trusts and the like. Chuck those in, and we collectively own an awful lot more of Britain plc.
Decline
That said, the trend is inexorably downwards. Share ownership by private individuals amounted to 12.8% of overall share ownership at the end of 2006 -- and a whopping 54% back in 1963.
And looking in detail at the figures, even the privatisation boom of the 1980s made little difference. Individuals held 28.2% of UK quoted companies in 1981 -- and 19.9% in 1991.
But the biggest falls in individual ownership are long behind us: individual ownership first dipped below 15% in 2001, and the rate of decline in share ownership has since moderated. By far the steepest falls were between 1963 and 1981.
Perhaps perversely, I'm not discouraged by these figures. The Fool has long argued that most investors' needs are better served by low-cost index trackers, and -- as with individual holdings held by unit trusts, investment trusts and other mutual forms of ownership -- these are excluded from the ONS' figures.
Foreign dominance
So who does own all the shares? One answer used to be pension funds, but since reaching a high in the high point of 1992, the proportion of shares held by pension funds has fallen.
| Share ownership 2008 | £ billion | % owned |
|---|
| Overseas | 481.1 | 41.5 |
| Insurance companies | 154.9 | 13.4 |
| Pension funds | 148.8 | 12.8 |
| Individuals | 117.8 | 10.2 |
| Unit trusts | 21.3 | 1.8 |
| Investment trusts | 22.1 | 1.9 |
| Other financial institutions | 115.3 | 10.0 |
| Charities | 8.7 | 0.8 |
| Private non-financial companies | 34.7 | 3.0 |
| Public sector | 13 | 1.1 |
| Banks | 40.6 | 3.5 |
| Total | 1,158.4 | 100 |
With the increasing number of alternative investment opportunities throughout the 1990s, it seems that fund managers looked to broaden their portfolios, seeking higher returns and better diversification. A trend towards bond investment started in 1999, and pension fund holdings are now -- as with private investors -- at their lowest figures since the 1960s.
But foreign investors' appetite for British shares is still unabated. Foreign investors comprise the largest group of share owners, and now hold 41.5% of the shares listed on the London stock market, up from 40% in 2006.
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