In our latest update to our MPS Proposition Comparison series of reports, we report quarterly asset growth for 25 DFMs offering discretionary MPS. The analysis suggests that keenly priced propositions are getting an outsized share of assets.
MPS assets continued to rise in 2020 and although growth rates slowed in 2021 there were still solid gains for most firms. Some DFMs saw considerable growth – HSBC Global Asset Management posted the largest net asset growth of the 6-month period and smaller firms like Sarasin & Partners and Betafolio nearly doubled in size.
The fastest growing DFMs all operate lower cost propositions. Our analysis found that DFMs charge anywhere from 6 to 40 basis points for their MPS fee – the majority of DFMs sitting in the 20 to 30 basis points range – plus OCF. The lowest MPS fees are being driven by new MPS entrants like Vanguard, Betafolio and LGIM who are all offering some of the lowest MPS charges and OCF rates in the market.
It is important to note that these new providers all offer passive products, and while this new price point should not directly impact active MPS providers will feel some pressure as advisers may look at these new low-cost options as too good of a deal the pass up.
We have long said that financial advisers need to look at both the OCF and MPS fee when comparing price. All of the fastest growing DFMs have both lower cost OCF and MPS.
We expect that this is the beginning of a price point shuffle as DFMs re-examine their fees and NextWealth will continue to research and report on this space.