At Defaqto, we are in a unique position in that our data collection and analysis not only allow us to look under the bonnet at what MPS providers are doing, but also at how the adviser is using the variety of tools we have made available, helping them create and define their respective CIPs and CRPs.
Over the course of the year, there are a vast array of reports and other material from data providers, providing insight into what is happening within the MPS arena – however, the biggest frustration we continually have, is that the vast majority still only represent and appraise a fraction of the market. For our part, we have been collecting MPS data for more than 15 years and the breadth and depth of data we can appraise is unrivalled. To put it into context, Defaqto captures data from more than 120 DFMs covering some 2,900 portfolios across both platform and direct, providing insight, comparisons and analysis that is unparalleled.
The rise and prominence of MPS compared with the traditional multi-asset solutions over the six years to the end of 2024 has been nothing short of phenomenal. The following table denotes the percentage growth rates in each calendar year since 2019 to the end of 2024. Simply put, since the start of 2019, there has been a 100% increase in the number of MPS portfolios available in the market for advisers to choose from.
“The myth of ‘the lower the cost, the better the return’ simply does not hold true in all instances and advisers need to be prudent and challenging of a DFM when undertaking their due-diligence
Source: Defaqto
The tools, functionality and data we use in the analysis and appraisal of MPS at Defaqto is readily available to not only advisers through our Engage platform, but also via licence to both DFM providers and asset management groups.
With so many MPS portfolios to choose from, the question is what criteria and filters are advisers using to help select DFMs and MPS solutions? The following table highlights adviser behaviour when considering, filtering and reviewing investments – and it is very clear that different behaviours are in place for single or multi-asset funds compared with MPS.
Source: Defaqto
It has long been stated that past performance is no guarantee to the future – and yet we can clearly see that, for single or multi-asset funds, it remains the dominant criteria. In contrast, from an MPS perspective, cost is the most important aspect – clearly aligning to some degree with the Consumer Duty outcome of ‘Price and Value’.
To showcase some of the analysis possible, let’s take a look at aspects that are pertinent for consideration of Consumer Duty. As the table above indicates, total cost is the most prominent filter selected by advisers when comparing or selecting an MPS – however, care and attention must be taken as not all are necessarily producing the type of returns one would expect.
Our next table denotes the range of total costs (MiFID II) broken down by each of the Defaqto MPS Comparator cohorts and the corresponding total performance return range from lowest to highest. The data is analysing 1,550 platform-listed MPS portfolios, with a minimum three-year track record as at 28 February 2025.
Source: Defaqto
As the table clearly shows, there is considerable disparity in both total costs and/or total return when appraising MPS portfolios by the Defaqto MPS Comparators. The myth of ‘the lower the cost, the better the return’ simply does not hold true in all instances and advisers need to be prudent and challenging of a DFM when undertaking their due-diligence.
The recent FCA announcement looking into how the mysterious and opaque world of MPS is applying Consumer Duty requirements will undoubtedly increase the focus and attention on aspects such as the above. We fully appreciate that an MPS service is far more than simply an investment – it comprises additional features such as manager access, investment material, valuations and so forth.
Even so, it is baffling to think that under the outcome of ‘Price & Value’, some of the propositions available are not only charging in excess of 1% but are delivering poor total returns. We should not forget though, Consumer Duty does not just fall upon the MPS provider, it also falls upon the adviser – and one wonders how such high costs are explained at a client annual review?
Andy Parsons is head of investment & protection at Defaqto
MPS Comparator Awards 2025
I cannot pass up the opportunity to share and recognise those MPS solutions that Defaqto has determined as being the very best, based on five years discrete risk-adjusted performance within each of the Defaqto MPS Comparators. In total, more than 1,100 portfolios were appraised.
Huge congratulations to the winners and highly commended funds – their success is a testament to the rigorous investment processes and philosophies they each adopt. MPS Comparator and all of the above data analysis, is readily available to Advisers, DFMs and Asset Management groups in Defaqto Engage. For more information, please visit here
Source: Defaqto
