Defaqto launches new innovative industry-leading MPS performance comparators

by | May 9, 2024

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Financial performance
  • MPS use is increasing, but until now, there has been no appropriate and compliant way of comparing MPS portfolios. 
  • Defaqto’s new range of MPS comparators seeks to address this with the most in-depth analysis available, making it easy to assess peer group portfolio performance.
  • Defaqto is also updating MPS performance data monthly, providing the most up-to-date consolidated view available across c.2700 portfolios.

Defaqto, one of the UK’s most trusted sources of financial product and market intelligence, has today announced the launch of Defaqto MPS Comparators, the UK’s first and only effective way to compare like for like portfolios.

MPS Comparator will make it easy for advisers to assess portfolio performance, for providers to differentiate their offerings, and to assist with their regulatory responsibilities. This new solution achieves this by allowing advisers to actively compare an MPS portfolio’s various metrics to the average of all those that have similar characteristics in terms of realised volatility and asset allocation.

Until now, there has been no appropriate and compliant way of making MPS provider comparisons from a whole market perspective. Defaqto calculates AUM has grown from around £75.4bn at the end of 2022 to £85.8bn at the end of 2023 – an approximate 13.9% increase. This has made it difficult for advisers to find the most suitable products for their clients and providers have not been easily able to differentiate their offerings from lower-performing alternatives. Both advisers and providers have been limited when determining their Consumer Duty responsibilities of offering client value.

 
 

Defaqto’s DFM coverage spans over 120 DFMs and around 2,700 portfolios, providing data such as performance, fees, and asset allocation. Along with the launch of MPS Comparator, Defaqto is also updating MPS performance data monthly, providing the most up-to-date consolidated view available in the market.

John Milliken, CEO at Defaqto, said: “Our new service is set to be a game-changer for MPS. This is another example of how we’re supporting advisers and their clients to make smarter financial decisions, helping improve adviser efficiency when assessing value and addressing regulatory obligations.

“For MPS providers, the performance comparators we’ve designed will offer competitor insight that we believe will become intrinsic to increasing assets under management.”

 
 

With this solution, advisers will be able to access Defaqto’s in-depth data analysis, allowing them to accurately compare like for like MPS propositions and make smarter recommendations. With closer scrutiny of key performance metrics and asset allocation, they can demonstrate best practice, enhance their due diligence and fulfil Consumer Duty requirements.

Meanwhile, providers will be able to compare a portfolio’s performance against its peer group with increased efficiency, and use data including key performance league tables, price series, and supporting documents to enhance their propositions. Through the insight gained they can improve the prominence of their proposition to generate more investment, maximise the likelihood of portfolio selection, and show the effectiveness of their investment management skills.

Andy Parsons, Insight Manager for Investments at Defaqto, said: “With MPS Comparator, we’re enabling smarter distribution. Currently, DFM asset managers choose between IA sectors, CPI + or other industry Indices to compare their MPS portfolios against. These don’t provide an appropriate comparison when assessing, comparing, and showcasing the performance of a portfolio. From a Consumer Duty perspective, advisers and clients could be misled in terms of performance comparison.

 
 

“MPS Comparator allows users to segment the managed portfolio universe and provides greater in-depth analysis than has previously been available anywhere.”

The Defaqto MPS Comparator is now available for advisers and providers and it will be available in Defaqto Engage soon. Further developments will be phased in during 2024.

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