Defaqto has launched a new tool allowing advisers to compare the performance of model portfolio services.
The software provider said MPS Comparator will allow advisers to assess portfolio performance and compare an MPS portfolio’s various metrics to the average of all those that have similar characteristics in terms of volatility and asset allocation.
The new tool will also enable providers to compare a portfolio’s performance against its peer group with increased efficiency and use data including key performance league tables, price series and supporting documents to enhance their propositions, the firm said.
John Milliken, CEO of Defaqto, said: “Our new service is set to be a game-changer for MPS. This is another example of how we’re supporting advisers and their clients to make smarter financial decisions, helping improve adviser efficiency when assessing value and addressing regulatory obligations.
“For MPS providers, the performance comparators we’ve designed will offer competitor insight that we believe will become intrinsic to increasing assets under management.”
Defaqto calculates assets under management have grown from around £75.4 billion at the end of 2022 to £85.8 billion at the end of 2023, a jump of 13.9%. It says that this has made it difficult for advisers to find the most suitable products for their clients and providers have not been easily able to differentiate their offerings from lower-performing alternatives.
Andy Parsons, insight manager for investments at Defaqto, said: “With MPS Comparator, we’re enabling smarter distribution. Currently, DFM asset managers choose between IA sectors, CPI + or other industry indices to compare their MPS portfolio against. These don’t provide an appropriate comparison when assessing, comparing and showcasing the performance of a portfolio. From a Consumer Duty perspective, advisers and clients could be misled in terms of performance comparison.”
He added: “MPS Comparator allows users to segment the managed portfolio universe and provides greater in-depth analysis than has previously been available anywhere.”
The Defaqto MPS Comparator is now available for advisers and providers and will be available in Defaqto Engage soon, with further developments expected to be phased in during this year.
