Defaqto has launched a new MPS comparison tool to the market in a UK first that will allow advisers to compare like-for-like portfolios.

The group’s new MPS Comparator solution lets advisers 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.

Until now, there has been no appropriate and compliant way of making MPS provider comparisons from a whole market perspective.

Defaqto, a data source for of financial product and market intelligence, has calculated that assets undermanagement (AuM) has grown from around £75.4bn at the end of 2022 to £85.8bn at the end of 2023 – an approximate 13.9% increase.

The group suggested this rise has made it difficult for advisers to find the most suitable products for their clients, and that providers have not been easily able to differentiate their offerings from lower-performing alternatives.

Defaqto CEO, John Milliken, said: “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.”

Both advisers and providers have also been limited when determining their Consumer Duty responsibilities.

With more scrutiny of key performance metrics and asset allocation, Defaqto suggested the new solution can allow advisers to demonstrate best practice, enhance their due diligence and fulfil Consumer Duty requirements.

Insight manager for investments at Defaqto, Andy Parsons, said the MPS Comparator can enable “smarter distribution”.

“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.”

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