Andy Parsons, insight manager for investments at Defaqto takes a closer look at the top performing portfolios which come under the Defaqto MPS Cautious Comparator.
Defaqto's MPS Comparator, launched this year, allows for a deep and thorough comparison across a multitude of data metrics, time periods, including not only net performance, but also costs and charges versus performance, and risk versus return.
Looking initially at net performance, the first table below illustrates the top 10 performing MPS portfolios as categorised under the Defaqto MPS Cautious Comparator, based on 3-year cumulative returns to the end of July 2024.
As the table clearly shows, whilst the spread of return between the first and 10th is 5.01 per cent, this is predominantly down to the top performing solution (Ascencia Portfolio of Sharia Compliant Solutions 4), generating 3.38 per cent more return than the second placed fund (Wellian (HIS) High Income. The spread between the second and 10th is extremely tight at only 1.63 per cent.
In terms of outperformance compared to the MPS Cautious Comparator average return for the three year period, all have delivered returns significantly in excess of the comparator average of just 4.61 per cent. Interestingly, during this period, there were some 50 portfolios that delivered an overall loss, with 24 returning more than a -3 per cent loss.
Top 10 league table – 3-year cumulative performance to end July 2024:
Defaqto MPS Cautious Comparator | Total Constituents = 293 | |||
Position | Portfolio Name | 3 Yr Cumulative Return * | Outperformance of Cautious Comparator Ave | Total Costs |
1 | Ascencia Portfolio of Sharia Compliant Solutions 4 - Platform | 19.83% | 15.22% | 1.24% |
2 | Wellian (HIS) High Income - Platform | 16.45% | 11.84% | 1.16% |
3 | AJ Bell Passive MPS 3 - Platform | 16.16% | 11.55% | 0.32% |
4 | Wellian (HIS) Balanced (Passive) - Platform | 16.14% | 11.53% | 0.54% |
5 | EPIC MPS Risk Targeted Managed 3 - Platform | 16.04% | 11.43% | 0.65% |
6 | AJ Bell Passive MPS Income 1 - Platform | 15.85% | 11.24% | 0.40% |
7 | OFNPM Balanced (Passive) - Platform | 15.54% | 10.93% | 0.34% |
8 | Binary Islamic Cautious - Platform | 15.30% | 10.69% | 0.91% |
9 | Wellian (HIS) Income - Platform | 15.15% | 10.54% | 1.07% |
10 | Credo MAP Core 60/40 - Platform | 14.82% | 10.21% | 0.67% |
Defaqto MPS Cautious Comparator Average | 4.61% | 0.69% | ||
* 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.
Considering the same 293 constituents over the same time frame, but from a risk / return perspective, we can see from the following scatter graph that there are clearly a handful of outliers. The chart clearly shows that, not only has the Ascencia Portfolio of Sharia Compliant Solutions 4 (yellow dot) delivered the best return at 19.83 per cent, it has also done so with one of the lowest volatilities.
With price and value being one of the key elements of consumer duty, the disparity in total costs, within the Top 10 is notable, with only six of the portfolios coming in with total costs less than the Defaqto MPS Cautious Comparator average of 0.69 per cent and the top performing portfolio being the most expensive within the Top 10.
As the cost versus return chart below shows, there is a vast breadth of disparity between the 293 portfolios being analysed here, ranging from the cheapest at 0.19 per cent returning 3.15 per cent during that period to the most expensive at 1.50 per cent which has returned only 1.67 per cent.
Asset allocation and key underlying holdings
Looking at the average asset allocation across the top 10 compared to the MPS Cautious Comparator average in the chart below, there are two very clear and distinctive variances.
The Top 10 are currently clearly indicating an overweight (25.1 per cent) to Global (ex UK) Fixed Debt compared to the Comparator average of (22.5 per cent), principally driven by the Ascencia Portfolio of Sharia Compliant Solutions 4 and Binary Islamic Cautious which both currently hold in excess of 50 per cent within this asset type.
