In this month’s article, we take a closer look at the top performing portfolios categorised as being constituents of the Defaqto Defensive MPS Comparator.
Each of the Defaqto MPS Comparator peer groups make it possible to compare various data metrics including net performance, costs & charges, and peer group asset allocations to determine underweight and overweight asset positioning, 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 Defensive Comparator, based on three-year cumulative returns to the end of June 2024.
As the table clearly shows, the top 10 within the Defaqto Defensive MPS Comparator shows a tight grouping of returns with a spread of only 4.06 per cent between 1st and 10th.
In terms of outperformance compared to the Defensive MPS Comparator average return for the three-year period, all have delivered returns significantly in excess of the comparator average of just 0.22 per cent. Putting it into context, the average return over the period for the top 10 is 9 per cent.
With price and value being one of the four outcomes of consumer duty, the disparity in total costs, within the top 10 is notable, with only four of the portfolios coming in with total costs at 40bps or less, with the Parmenion Distribution Technology Passive – Risk Grade 1 being the cheapest at 28bps.
Interestingly, with costs such an important consideration for advisers, the average of the Top 10 is 63bps, whereas the average for the Defaqto Defensive MPS Comparator is marginally less at 62bps. Overall, 17 of the 269 constituents currently charge 100bps or more, and of which, 11 have total costs greater than 110bps.
Top 10 league table – three-year cumulative performance to end June 2024
Defaqto Defensive MPS Comparator | Total Constituents = 269 | |||
Position | Portfolio Name | 3 Yr Cumulative Return * | Outperformance of Defensive Comparator Ave | Total Costs |
1 | Rivers Cautious Portfolio - Platform | 11.58% | 11.36% | 0.84% |
2 | OFNPM Cautious (Passive) - Platform | 9.90% | 9.68% | 0.34% |
3 | Parmenion Distribution Technology Multi Option Active - Risk Grade 1 - Platform | 9.57% | 9.35% | 0.40% |
4 | Parmenion Distribution Technology Passive - Risk Grade 1 - Platform | 9.57% | 9.35% | 0.28% |
5 | Ascencia Safety First 4 - Platform | 9.36% | 9.14% | 0.94% |
6 | Bordier Hybrid Passive Managed Service Cautious - Platform | 8.50% | 8.28% | 0.90% |
7 | Evelyn Partners Core Conservative - Platform | 8.42% | 8.20% | 0.72% |
8 | Bordier Risk Targeted (RT) Decumulation Service RTD5 - Platform | 7.87% | 7.65% | 0.87% |
9 | FE Investments Mosaic Risk Level 3 Short - Platform | 7.67% | 7.45% | 0.70% |
10 | OFNPM Defensive (Passive) - Platform | 7.52% | 7.30% | 0.34% |
Defaqto MPS Defensive Comparator Average | 0.22% | 0.62% | ||
* 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.
Whilst 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 to the end of June 2024, of the 269 cohorts in Defaqto MPS Defensive Comparator, there were 180 portfolios that achieved a total return of 2 per cent or less.
Of which, 119 have recorded an overall loss during this period and 25 have delivered a loss greater than -5 per cent.
Asset allocation and key underlying holdings
Looking at the average asset allocation across the top 10 compared to the Defensive MPS Comparator average in the table below, there are two very clear and distinctive variances.
The Top 10 are currently clearly indicating an overweight (14.91 per cent) to UK Cash (includes Money Market funds) compared to the Defensive MPS Comparator average, whereas they are currently reporting a significant underweight (18.69 per cent) to Global (ex.UK) Fixed Income compared to the Defensive MPS Comparator average.
Interestingly, when looking at all the other asset types, the only other notable overweight within the top 10 is that of North American Equity (2.28 per cent).
The overweight to North American Equities has undoubtedly helped drive the strong returns and notable outperformance against the Defaqto Defensive MPS Comparator Average which is only just showing a positive return over the three-year period.
