ARC Research, a UK provider of peer group performance analytics, is launching ARC Managed Platform Solutions (‘MPS’) Indices to give financial advisers “clarity” on the performance of MPS managers.
The new indices, to be launched in Q2 2025, will include model portfolios on adviser platforms together with funds that mirror MPS strategies. They will be free to access by IFAs.
Over the past 20 years, the ARC Research Private Client Indices (PCI) have become the benchmark for the private wealth industry in understanding investment performance. Using its expertise in performance analytics, it is following suit with “robust and trusted” MPS Indices for financial advisers – building a universal-standard comparator index series for MPS solutions.
The new index launch coincides with the continued growth of the MPS market, driven by evolving client demands and changing market dynamics. While growth in assets predates Consumer Duty, recent regulations and increasingly competitive fee pressures have further accelerated adoption. More than a third of IFA firms rely on MPS for most or all their clients, while assets under management have swelled by 28%.
Until now, many IFAs have used the ARC PCI as a proxy for comparison against model portfolio solutions but there are distinct differences between the two. The new MPS Indices will give IFAs a more accurate and appropriate reflection of a solution’s performance against its peers.
For example, the ARC PCI are net of all fees and show the average investor performance outcome, but the new MPS Indices will show targeted outcomes from an investment strategy accessible on a platform. The Indices will be net of investment fees such as investment management charges and underlying instrument costs but importantly will exclude platform and adviser charges.
The actual investor outcome will vary depending on the individual fee arrangements charged by the adviser and platforms.
The new Indices will be asset allocation-based rather than risk-based as is the case with ARC PCI – advisers want to look at expected outcomes based on an asset allocation. The indices will be net of manager fees based on the most used platform. The asset allocation categories will be 0-20%, 20-40% 40-60% 60-80% and 80-100%. The Indices will launch with approximately 500 models from more than 70 investment managers and will initially be calculated quarterly, with monthly and daily estimates.
Dan Hurdley, managing director at ARC Research, said: “The MPS sector has matured enough to warrant its own dedicated index series that reflects its unique characteristics, distinguishing it from private client discretionary services. Demand is growing for more specific data, particularly from the IFA community, and while the ARC PCI has always been a good proxy, there are differences.
“Given our position as the leading provider of robust and trusted performance comparators, we believe we are well-placed to launch a new series alongside the other ARC Wealth Indices. Working closely with MPS providers, it’s a series that we believe can become the benchmark for comparing MPS performance.”
Existing members of ARC data contributors submitting model portfolios will be transferred to the MPS Indices for Q1 2025.
