In this month’s Defaqto MPS Comparator article, Andy Parsons, insight manager for investments at Defaqto, takes a closer look at the top performing portfolios categorised as being constituents of the Defaqto MPS Balanced Comparator.
By the very nature of the way in which the Defaqto MPS Comparator peer groups have been constructed, it allows for a deep and thorough comparison across a multitude of data metrics, time periods, including not only net performance, but also costs & charges versus performance, and risk versus return, all of which are looked at within this article.
Looking initially at net performance, the first table below illustrates the top 10 performing MPS portfolios as categorised under the Defaqto MPS Balanced Comparator, based on 3-year cumulative returns to the end of August 2024, but also indicating their 3-year annualised returns.
As the table clearly shows, the spread of return between 1st and 10th is only 3.09 per cent, albeit the variance between 1st and 3rd is 2.01 per cent and then only 1.08 per cent between 3rd and 10th.
In terms of outperformance compared to the MPS Balanced Comparator average return for the 3-year cumulative period, all have delivered returns significantly in excess of the comparator average of just 5.27 per cent.
Interestingly, during this period, 20 per cent of the cohort (55 portfolios) delivered an overall loss, with around 50 per cent of these (26 portfolios) returning more than a -4.05 per cent loss, with the biggest loss being 11.25 per cent.
Top 10 league table – 3-year cumulative & 3-year annualised performance to end August 2024
Defaqto MPS Balanced Comparator | Total Constituents = 288 | ||||
Position | Portfolio Name | 3 Yr Cum Rtn * | Outperformance of Balanced Comparator Ave | 3 Yr Annualised Rtn | Total Costs |
1 | Ascencia Portfolio of Sharia Compliant Solutions 6 - Platform | 20.00% | 14.73% | 6.27% | 1.09% |
2 | Ascencia Portfolio of Sharia Compliant Solutions 5 - Platform | 19.34% | 14.07% | 6.07% | 1.15% |
3 | Charles Stanley Multi Manager Inc5 - Platform | 17.99% | 12.72% | 5.67% | 1.10% |
4 | Charles Stanley Multi Manager Inc4 - Platform | 17.50% | 12.23% | 5.52% | 1.03% |
5 | OFNPM Growth (Passive) - Platform | 17.34% | 12.07% | 5.48% | 0.33% |
6 | AJ Bell Passive MPS 4 - Platform | 17.33% | 12.06% | 5.47% | 0.31% |
7 | Fundhouse Responsible Global Growth - Platform | 17.17% | 11.90% | 5.42% | 0.79% |
8 | Fundhouse Global Growth - Platform | 17.03% | 11.76% | 5.38% | 0.88% |
9 | Morningstar Moderately Adventurous Passive Portfolio - Platform | 16.92% | 11.65% | 5.35% | 0.41% |
10 | PAM Adventurous Passive Portfolio - Platform | 16.91% | 11.64% | 5.34% | 0.27% |
Defaqto MPS Balanced Comparator Average | 5.27% | 1.69% | 0.76% | ||
* 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 288 constituents over the same time frame, but from a risk/return perspective, we can see from the following scatter graph that there are a significant number of outliers, especially those that have not only generated a negative return over this period but have done so with more risk than many of their cohorts.
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 four of the portfolios having a total cost figure less than the Defaqto MPS Balanced Comparator average of 0.76 per cent, with the top four portfolios being the most expensive within the Top 10, and all over 1 per cent.
As the cost versus return chart below shows, there is a vast breadth of disparity between the 288 portfolios being analysed here, ranging from the cheapest at 0.19 per cent returning 9.13 per cent during that period to the most expensive at 1.40 per cent which has delivered an overall loss of -7.62 per cent.
As the above charts and table demonstrate, advisers need to undertake thorough due diligence when determining potential investment solutions for their clients.
At Defaqto, we firmly believe that our MPS Comparators, provide the open transparency that’s been missing from the MPS investment arena, bringing it more in line with traditional multi-asset and single asset fund analysis and ensuring comparisons can be undertaken on a clear and measurable like for like basis.
Defaqto MPS Comparator analysis is derived from data supplied by c.122 DFMs across c.2,700 portfolios (platform & direct).
