Defaqto has launched MPS Comparator performance averages for passive and active portfolios.

The two new performance average ranges are available as subsets of Defaqto’s whole-of-market MPS Comparator tool, which launched last year.

Defaqto said that the comparators would make it simple for advisers to assess portfolio performance and for discretionary fund managers (DFM) to differentiate their offerings, supporting both with their regulatory responsibilities.

Advisers will be able to actively compare an MPS portfolio’s various metrics to the average of those that have similar characteristics in terms of realised volatility and asset allocation.

Defaqto head of investment & protection, Andy Parsons, said the launch of the MPS Comparator had been a “game-changer” for advisers and DFMs.

“For the first time, like-for-like comparisons of MPS portfolios in similar risk peer groups can be compared against a performance average which is made up of real portfolios,” Parsons continued.

“The success of these MPS performance comparators coupled with the growth and popularity of passive portfolios made it an obvious next step to launch active-only and passive-only performance averages.

“Our internal analysis of Defaqto Engage – used by around a third of advisers in the UK – showed that the second most popular filter, after cost and crucially ahead of performance, for MPS portfolio selection was the active/passive filter, which underlined the need for these new performance averages.

“This launch demonstrates how, as a data and technology provider, we are evolving in serving the adviser market.”

Data from Defaqto showed that while passive portfolios were lower cost than active portfolios on average, there were exceptions.

Furthermore, the market intelligence firm said lower costs did not always translate into better returns, nor do above average costs necessarily translate into poorer performance, meaning value for money can sometimes come at a higher cost.

Through the new solution, providers can compare a portfolio’s performance against their peers and use data such as key performance league tables, statistical ratios and supporting documents.

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