Following the recent launch of the new Defaqto MPS Comparator, Andy Parsons, insight manager investments at Defaqto, takes a closer look at the top-performing portfolios that are categorised as being constituents of the ‘Adventurous’ comparator.
Each Defaqto MPS Comparator peer group makes it possible to compare various data metrics including net performance, costs and charges, and peer group asset allocations to determine underweight and overweight asset position, relative to the corresponding Defaqto MPS Comparator peer group.
The table below illustrates the top 10 performing MPS portfolios as categorised under the Defaqto MPS Adventurous Comparator, based on three-year cumulative return to the end of May 2024.
And unlike the IA Flexible Sector, where the disparity in returns between the top performer and 10th place on a three-year cumulative return was in the region of c.12 per cent, the Defaqto MPS Growth Comparator shows a much tighter grouping of returns with a spread of only 4.53 per cent between 1st and 10th.
In terms of outperformance compared to the Adventurous Comparator average return for the three-year period, all have delivered returns significantly in excess of the comparator average of 10.19 per cent. Putting it into context, the average return over the period for the top 10 is 26.31 per cent.
In respect of the total costs, notably all bar three of the portfolios come in at 29bps or less, with the two Timeline 0.09 per cent Tracker 100 & 90 portfolios being the cheapest at 20bps.
Interestingly, with costs such an important consideration for Advisers, the average of the top 10 is 30bps, whereas the average for the Defaqto MPS Adventurous Comparator is 85bps.
Overall, 103 of the 261 constituents currently charge in excess of 100bps, and of which 27 have total costs greater than 130bps.
Defaqto MPS Adventurous Comparator | Total constituents = 261 | |||
Position | Portfolio name | 3-year Cumulative Return* | Outperformance of Adventurous Comparator average | Total costs |
1 | Timeline 0.09% Tracker – 100 – Platform | 29.14% | 18.95% | 0.20% |
2 | Timeline 0.15% Tracker – 100 – Platform | 28.91% | 18.72% | 0.26% |
3 | Sparrows Capital Score Marlet Equity 100 (Funds) - Platform | 27.22% | 17.03% | 0.27% |
4 | Parmenion Vanguard LifeStrategy Portfolio 10 – Platform | 27.12% | 16.93% | 0.29% |
5 | Timeline 0.09% Tracker – 90 – Platform | 25.45% | 15.26% | 0.20% |
6 | Morningstar International GBP Adventurous Growth – Platform | 25.32% | 15.13% | 0.61% |
7 | Brewin Dolphin MPS Global Equity Passive Plus – Platform | 25.25% | 15.06% | 0.31% |
8 | Timeline 0.15% Tracker – 90 – Platform | 25.22% | 15.03% | 0.26% |
9 | Tatton Tracker Global Equity – Platform | 24.81% | 14.62% | 0.25% |
10 | OFNPM Adventurous (Passive) - Platform | 24.61% | 14.42% | 0.33% |
| Defaqto MPS Adventurous Comparator Average | 10.19% |
| 0.85% |
Source: Defaqto. * Performance figures are calculated from the portfolio values submitted by the respective DFM providers. Whilst every effort is undertaken to ensure the accuracy and timeliness of them, Defaqto accepts no responsibility for any inaccuracies in the reporting provided. | ||||
Asset allocation and key underlying holdings
Looking at the average asset allocation across the top 10 within the league table, it is interesting to note that the top 10 portfolios have an appreciably higher allocation to North America (c.53 per cent) than the Adventurous Comparator average of 33 per cent.
Taking a closer look at the other notable asset allocations, the only other region the top 10 are overweight compared to that of the Adventurous Comparator is Europe (Ex.UK) Equity, where the overweight is c.1.5 per cent.
Interestingly, the top 10 are underweight for both UK Equity and Emerging Markets Equity compared to the comparator average. The significantly higher exposure to North America Equities has undoubtedly been a key reason for the strong returns and notable outperformance against the Defaqto Adventurous Comparator.
A closer examination of some of the most prominent underlying holdings for those portfolios submitted clearly indicates a preference for passive investments rather than active, aligning to helping reduce and minimise costs within the various portfolios.
Examples of some of the most favoured underlying investments include Fidelity Index US & UK, HSBC American Index, L&G International Index, Vanguard US Equity Index, Vanguard FTSE Developed World ex.UK Equity, iShares North American, iShares UK Equity Index and Vanguard Emerging Markets.
While the attention has focused on the strength and outperformance of the top 10, advisers and their clients need to be mindful that during the three-year cumulative period in question, to the end of May 2024, of the 261 cohorts in Defaqto MPS Adventurous Comparator, there were 51 portfolios that have not achieved a total return of 2 per cent, of which 27 have recorded an overall loss during this period.
