Skomer Island lies off the coast of Pembrokeshire, a bumpy 20-minute boat ride across the Celtic Sea from the mainland. It attracts a vast array of wildlife throughout the year including dolphins and seals – but is perhaps best known for being the largest Atlantic puffin breeding colony in the south of England. In common with the rest of the world, UK Atlantic puffin numbers are in decline: the population has dwindled by 25% since 2000 and the species has been identified as vulnerable to global extinction. Yet Skomer’s puffins have bucked this trend for the second year in a row: in 2026 their numbers have hit record highs. Over 52,000 of them now line the cliffs on the tiny island, an increase of over 8,000 from the previous year. Various factors contribute to their success – an absence of ground predators due to its isolated location plays a role, as do careful conservation efforts to keep it that way. Visitor numbers to the island are strictly limited and building has been limited to a single farmhouse – the only accommodation. Stringent rules are also applied to ensure no predators such as rodents are accidentally imported.
Much like the UK’s puffins, domestic ownership of UK equities has also experienced a long-term downward trend, with nearly £2 trillion of investment by pension providers and wealth managers moved away from domestic equities in favour of other markets. In the early eighties it was almost a given that UK investors would invest in home-grown stocks: ownership stood at over 96% at the start of that decade. By 2022 that had slipped to 42% as investors increasingly sought opportunities elsewhere in the world.
Few would argue against the conservation efforts on Skomer that are ‘artificially’ reversing the decline of the species on the island. But the question of whether interventionist measures should also reasonably be applied to boost investment in our domestic equity market is less straightforward.
Dividends from FTSE 100 investments are predicted to hit £88bn this year.
In 2025, the UK government introduced the Mansion House Accord – a voluntary scheme for UK pension providers. Currently, 17 of the biggest companies are signed up to it – committing themselves to investing 10% of their defined contribution pension portfolios in private markets, including 5% in the UK. So far, so good. Yet the government hasn’t stopped there – the Pension Schemes Act 2026 gives it the option to make the scheme compulsory in the future if it feels progress has not been significant enough. It is this Act that many feel oversteps into a breach of the principles of free market economics, namely that governments should not interfere with markets, and that consumers should have the freedom to choose how they invest.
The reason for the introduction of these measures is a desire to further long-term GDP growth: while UK residents opting to invest abroad will not be impacted by the decline in domestic UK equity ownership in their capacity as investors, as citizens they would feel the economic impact from a resulting slowdown in GDP growth if the flow of capital away from UK stocks continues.
Ultimately though, the more obvious and better solution to encouraging investment in home-grown stocks is for the UK market to be attractive enough for domestic investors to want to put capital into it of their own volition. We see the undeniable draw of US markets, with their high technology bias and the US Mega Cap stocks which have continued to deliver. The more defensively positioned UK market with its high underlying overseas earnings and lower valuation does also have its attractions though, and this has held it in good stead in spite of the current political uncertainty. In addition, the income bias of UK stocks certainly appeals to investors: dividends from investments in the FTSE 100 are predicted to hit £88bn this year, an average annual dividend yield of 3.3% compared to 2.1% for America’s S&P 500 or the 1.6% average for Japan’s Nikkei 225. Even though we see increased opportunities overseas, UK equities will continue to have a place in portfolios. Whilst initiatives to push UK investors to invest in the UK are well intentioned, UK markets need to attract money in their own right.
