Defaqto has launched managed portfolio service Comparator performance averages for passive and active portfolios.
The two new performance average ranges are unique in the market, available as subsets of Defaqto’s whole-of-market MPS Comparator tool that launched last year.
MPS Comparator makes it easy for advisers to assess portfolio performance and for discretionary managers to differentiate their offerings, assisting both with their regulatory responsibilities.
Defaqto said the solution achieves this by allowing advisers to actively compare an MPS portfolio’s various metrics to the average of all those that have similar characteristics in terms of realised volatility and asset allocation.
Andy Parsons, head of investment and protection at Defaqto, said: “The launch of Defaqto MPS Comparator has been a game-changer for both advisers and discretionary managers. For the first time, like-for-like comparisons of MPS portfolios in similar risk peer groups can be compared against a performance average which is made up of real portfolios.
“The success of these MPS performance comparators coupled with the growth and popularity of passive portfolios made it an obvious next step to launch active-only and passive-only performance averages.”
According to Parsons, internal analysis of Defaqto Engage showed that the second most popular filter for MPS portfolio selection, after cost and ahead of performance, was the active/passive filter.
Defaqto’s data shows that while passive portfolios are on average lower cost than active portfolios, there are exceptions. Looking at returns, lower costs do not always translate into better performance, nor do above average costs necessarily translate into poorer performance.
An earlier report from the market intelligence group found that MPS portfolios are now likely to have overtaken multi-asset funds in new business total recommendations, but there is a broad disparity in returns and cost.
Main image: OzfD79w8ptA-unsplash
