Discretionary managed portfolio service (MPS) assets increased by 32 per cent year-on-year to £190bn at the end of September 2025, analysis from NextWealth has revealed.

Its MPS Proposition Comparison Report 2025 noted that discretionary MPS assets were set to surpass £200bn, with growth driven by strong inflows into the sector’s largest providers.

Of the assets added over the past year, £28.6bn was from 10 firms, representing 62 per cent of the net growth.

The two top-ranked discretionary fund managers (DFM), Quilter WealthSelect and Tatton, now control 25 per cent of market assets.

Quilter WealthSelect’s assets under management (AUM) increased by 34 per cent year-on-year to £23.4bn at the end of September, while Tatton saw asset growth of 30 per cent to £22.9bn.

While these were the two firms that topped the rankings, the whole sector was continuing to grow.

Timeline Portfolios saw year-on-year asset growth of 56 per cent, 7IM’s AUM rose by 117 per cent, and Omnis Investments' AUM increased by 77 per cent over the same period.

Only three firms saw net outflows over the year and 37 of the 49 DFMs included in the report achieved percentage growth above that of the MSCI World Index.

The report said that sector growth looked set to continue, with a net 21 per cent of 296 advisers surveyed planning to increase their allocations to discretionary MPS over the next 12 months.

Of the advisers already using MPS, 48 per cent expected to increase their use, while 30 per cent of advisers building their own portfolios anticipated their use of MPS would rise.

Commenting on the report, NextWealth managing director, Heather Hopkins, said: “We are often asked if we have hit ‘peak MPS’. The evidence points to a firm no.

“The findings support our view that use of discretionary MPS will continue to increase, both among advisers already using them and those currently building their own portfolios.

“MPS remains the investment solution of choice and, given that MPS still only makes up 21 per cent of adviser platform assets, there is a huge amount of room to grow.”

The report also found that advisers had increased the number of DFMs they use for the first time in four years.

Between 2020 and 2024, the number of DFMs advisers were partnering with on average fell from 2.5 to 1.3 amid growing complexity and Consumer Duty requirements.

However, the average number of DFMs used by advisers increased to 1.7 in 2025.

“In our interviews with DFMs, we heard that advisers have been reassessing their CIPs to ensure they offer a diversified set of asset allocation approaches,” Hopkins said.

“Some, for example, want at least one panel option that is underweight the US or the ‘Magnificent Seven’. In some cases, they want a contrarian investment philosophy to have a more rounded toolkit.”

The report highlighted a continuation of the move to passive instruments in discretionary MPS, with the average allocation to active falling by 18 percentage points to 53 per cent over the past three years amid pricing pressures.

However, the pace of this trend has slowed as fee pressure has eased, with the average total cost of MPS now 0.51 per cent.

NextWealth said it expected fees to decline only slightly from here on an asset weighted basis, driven by the rise of the big passive MPS players rather than further price cuts.

“The price war in MPS is over,” Hopkins commented. “Our interviews confirm that DFMs are feeling less pressure on fees.

“We expect that the average total cost for MPS will settle around 45bps. The declines happening at down to growth of low cost passive providers rather than any further fee cuts. DFMs are increasingly focused on how to differentiate their propositions beyond price.”

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