UK Individual Shareholders Society
SOME BACKGROUND INFORMATION
This page contains some background information on the UK stock market, and the investors in it, including the role of individual investors. There are two problems with obtaining and analysing this information. One is the difficulty that many shares are now held in nominee accounts, so identifying the beneficial owners is not easy. The second problem is that the sources of such information are patchy and often out of date. But here is what is known:
At the end of 2014, and based on “beneficial” ownership, the Office of National Statistics indicated that individuals held 11.9% by value of shares listed on the LSE. That compares with 16.0% held by pension funds, insurance companies and other financial institutions. But 53.8% of shares were held by foreign investors, which presumably would also be mainly held by institutions. Many people have questioned the individuals figure and believe it is substantially higher if shares held in nominee accounts (such as ISAs) were properly taken into account although the ONS does try to assign the beneficial ownership of those. However, assuming the measures were consistent, it is worth pointing out that after a long term decline (it was as high as 20% in 1994 for example), it rose between 2012 and 2014.
Other evidence was a submission by APCIMS to the Kay Review (based on work by Cass Business School in 2011) which suggested that retail shareholders accounted for about 30% of the ownership of FTSE100 companies although it seems likely they took indirect ownership via unit trusts, OEICs, investment trusts and personal pensions into account. It is possible that the aforementioned trend simply represents the migration of shareholders into nominee accounts and into funds and SIPPs. It is likely the 30% is a more accurate representation of the interest of individuals in stock market investment.
In 2004 the LSE reported some figures on share trading volumes and at that time private clients created 65% of trades by volume, but only 8% by value. But it is known that the proportion of accounts held by traditional stockbrokers for clients which are “advisory” was falling as opposed to “discretionary” accounts. In other words, fewer and fewer people were making their own investment decisions at that time.
In 2005/6 a survey by the Department of Work and Pensions suggested that 20% of UK households held shares (that suggests as many as 10 million people), but the vast majority held only a few shares which were rarely traded. A survey by Mori in 2002 indicated that 22% of adults held shares, but 12% held only privatised or demutualised shares. The median value of share portfolios was about £5,000 and the median number of companies held was only 3. In 2015 a BIS Department Consumer Omnibus Survey confirmed that 20% of the public held shares directly or via ISAs/SIPPs, equivalent to about 12 million people at that time (see the Paper entitled “Research on the Intermediated Shareholding Model”).
According to the submission by the Shareholder Rights Working Group to the DTI in 2005, there were approximately 4 million people holding nominee accounts, with 23 million shareholdings in those accounts. There were about 40,000 personal Crest members in 2001, with an average value of about £50,000 so these are clearly more substantial investors. But that had fallen to 20,000 investors by 2015 according to the research paper published by the BIS Department. In addition to those numbers there are many people who hold shares in “certificated” form, particularly demutualisation or privatisation holdings. The BIS Paper mentioned above gives more information on the background of investors, how frequently they trade and how they hold their shares.
The APCIMS submission to the Kay Review in 2011 suggested there were now 6 million
retail investor accounts (although some people may have been holding more than one
account). This is supported by information from Compeer published in 2012 who reported
that there were 3.5 million execution only nominee accounts, up from 1 million in
Another statistic that gives figures for the number of private investors is the data for ISA holders. Based on figures from HMRC which are published annually, there were 24.4 million adult ISA holders at the end of 2011, with average savings of £14,950. However 16.5m of those were holding “Cash ISAs” only. Some 3.0m held only “Stocks & Shares” ISAs with 4.7m holding both Cash and Stocks & Shares ISAs. In the Stocks & Shares ISAs there were total holdings of £190bn in 2012, but only 16% of those holdings were in shares directly, with the 74% being in Unit Trusts, OEICs and Investment Trusts (the latter being the smallest element of those three).
Trying to identify the number of active private investors with non trivial holdings
in the UK is somewhat problematic, but looking at the readership of publications
such as Investors Chronicle and tip sheets that appeal to such investors, it is probably
at best a few hundred thousand although some may simply rely on their stockbrokers
for information (they may even hold “discretionary” accounts), or do not actively
trade. There are also an unquantifiable number of execution only traders who trade
actively but move in and out of the market -
If you know of other sources of information to those given here, please let us know.
As with all such data, be wary of interpreting the statistics given here. Check with the original sources if necessary.
Did you find this information useful? If so why not join ShareSoc and help to support our activities? Go here for more formation: Membership