The Managed Portfolio Services (MPS) market has entered a new era of rapid expansion and diversification, according to the newly released Defaqto in Focus: MPS report, the most comprehensive analysis of the landscape ever produced.
Informed by data drawn from Defaqto’s Engage Insights analysis and research tool designed for asset managers and DFMs, the 350-page report provides market-leading detail on the substantial growth of MPS.
The report shows the number of available MPS funds has surged, with more providers entering the market, expanding choice for advisers. There are now 50% more firms in the retail market than there were in 2016 and over 120 firms today offer an increasing number of propositions and portfolios. Driving the convergence of MPS and multi-asset recommendations by advisers, 2,029 platform portfolios are currently available.
Defaqto’s analysis shows a huge spread of returns over three and five year periods and examination of MPS costs shows an active solution can be cheaper than passive. All performance league tables have been made available for the first time, showing cumulative performance over one, three and five years.
Andy Parsons, Head of Investment & Protection at Defaqto, said: “In recent years, the MPS market has undergone remarkable growth – yet it remains shrouded in complexity and, all too often, unnecessary opacity. Perhaps the biggest market trend is the growth of MPS as an outsourcing solution, with assets under management showing a clear upward trajectory. As explained in our report, we would suggest that the crossing point between multi-asset funds and MPS portfolios may now have been reached with MPS recommendations surpassing multi-asset. The question is: will this remain given the FCA’s investigation into MPS?”
Performance insight: The surprising spread of returns
The Defaqto in Focus: MPS report, available to download now, also highlights the significant disparity in returns between portfolios within the same MPS Comparator cohort. The five cohorts – Defensive, Cautious, Balanced, Growth, and Adventurous – show wide variations in performance. This presents a key challenge for advisers, as the differences in returns within a single cohort can be substantial.
Using Defaqto’s MPS Comparator tool within Engage Insights and analysing more than 2,000 portfolios, the report benchmarks cumulative and discrete returns across five Comparator cohorts based on historic risk returns. Findings include that within the ‘Balanced’ cohort, three-year cumulative returns range from just 0.54% to 27.98%, while ‘Growth’ portfolios show an even broader disparity over five years, from -6.44% to 64.15%.
This disparity exposes advisers to greater scrutiny, particularly in today’s regulatory environment. Low-returning portfolios, even if aligned to client risk profiles, may raise red flags without supporting due diligence.
Andy Parsons said: “Being forewarned is being forearmed. With such clear gaps in performance, this benchmarking data gives advisers the confidence to challenge portfolio managers, justify selections, and demonstrate independent oversight. An adviser who has seen a -6% return over 5 years should certainly be having a conversation.
“The takeaway is clear – performance benchmarking is not optional but essential. Advisers must access rigorous frameworks to support portfolio assessment, client outcomes, and compliance.”
Cost comparison: Rethinking Active, Passive and ESG
Cost transparency continues to be a key priority for advisers and the new ‘MPS in Focus’ analysis challenges some long-held assumptions about what different investment styles should cost.
The report breaks down average total costs across active, passive, and ESG-managed portfolios within each Comparator cohort. It reveals that, while passive portfolios typically remain the lowest cost, there are surprising overlaps.
In some cohorts, ESG portfolios are priced similarly to active, yet may actually deliver efficiencies more in line with passive approaches. Conversely, some active portfolios are available at costs comparable to passives, challenging perceptions that active always comes at a premium.
Andy Parsons said: “The learning here is that you must investigate and not assume. Headline service fees alone can be misleading, and only total cost paints the full picture. We see wide bands between the highest and lowest costs which reinforces the need for advisers to look beyond labels and consider how style, structure, and underlying fund composition impact total expense.”
MPS moving forwards
As the MPS market continues to expand in scale and complexity, the need for structured, data-driven insight has never been greater. The Defaqto in Focus: MPS report brings together a breadth and depth of analysis that reflects the real-world challenges advisers and investment professionals face, from evidencing due diligence to understanding relative performance and cost.
Andy Parsons added: “We’ve leveraged more than 15 years of data and market leadership to make comparative information more accessible and consistent as part of our mission to drive transparency, innovation, and higher standards in the fast-evolving MPS sector.”
Defaqto in Focus: MPS can be downloaded here.
