Discretionary managed portfolio service (MPS) asset growth has continued over the past 12 months at a faster pace than underlying platform assets, according to NextWealth’s MPS tracking study.

It found that assets in discretionary MPS saw growth of 11 per cent over the past 6 months and 25 per cent over the past year.

Meanwhile, underlying platform assets increased by 5.3 per cent over the same year-on-year period.

“The market for discretionary MPS continues to grow, with assets growing faster than underlying platform assets,” said NextWealth managing director, Heather Hopkins.

“While assets in discretionary MPS were up 25 per cent in the year, that compares to only 5.3 per cent for platform assets.

“We are not just seeing strong growth but a continued shift in assets. Within the pie that MPS is operating in, it continues to take a bigger slice.”

The report also highlighted that fee pressure had flattened out, with the average total cost decreasing by 4bps over the past 12 months and remaining stable over the past six months.

Between 2021 and 2024, the asset weighted average total cost paid by clients has nearly halved, from 1 per cent to 0.54 per cent.

Hopkins said that NextWealth was “calling the bottom” on fees, as while there had been a rapid decline in recent years, primarily due to a higher allocation to passive tracker funds, downward pressure seemed to have eased.

“We think fees have bottomed out and will remain stable over the next two to three years,” she stated.

The report noted that one of discretionary fund managers’ (DFM) key responses to fee pressure was the increased use of passives, caused by growth in low-cost tracker portfolios and use of passive funds in hybrid portfolios.

However, in the latest dataset, NextWealth found that the shift to passive had plateaued, with assets in passives falling slightly to 42 per cent as some fully active DFMs have seen strong asset growth.

The top five DFMs by net asset growth over the past six months were Quilter Wealth Select, Tatton, Timeline, Omnis, and Brooks Macdonald, while Blackfinch, Marlborough, Aspen, LGIM, and Omnis saw the largest percentage growth.

“While Quilter Wealth Select and Tatton continue to capture an outsized share of assets in discretionary MPS, the market remains vibrant and competitive,” said Hopkins.

“Firms with different business models and different pricing structures continue to experience strong growth.

“Among the fastest growing firms are service-led firms, low-cost passive providers, vertically integrated wealth managers and firms offering a higher-cost active solution. This points to a healthy and competitive market.”

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