What 1500 Model Portfolios Show Us About Investment Trends
When you can see the movements and machinations of the whole market, you begin to see interesting patterns emerge. Our analysis of over 1500 model portfolios reveals fascinating shifts in investment strategy, risk management and fee structures across the global wealth management industry.
The American Appetite
Perhaps the most striking trend is a steady increase in US exposure. Our data shows average US allocation has grown from 14% in 2014 to nearly 24% in 2024, with the steepest rise occurring since 2020. More than following market capitalisation, this data reveals an interesting shift in how UK wealth managers view geographical diversification.
The China Question
While US exposure has surged, China tells a different story. Despite the growing number of available models incorporating Chinese exposure (from 400 in 2015 to over 1000 today), the average allocation peaked at 3% in 2020 and has since declined to around 2.2%. This trend suggests wealth managers are taking a more nuanced approach to emerging market exposure.
Fee Evolution
The distribution of MPS provider charges reveals an interesting picture of market positioning. While the majority (696 models) maintain charges between 0.21-0.3%, there is significant variation:
- 86 models operate in the ultra-low-cost space (0-0.1%)
- 452 position themselves in the value segment (0.11-0.2%)
- Only 26 models charge above 0.51%
This clustering suggests a market that is still defining its value proposition, with clear segmentation between low-cost and premium offerings.
The Risk-Return Balance
Good news for risk averse investors. Our analysis of risk-adjusted returns challenged our most common assumptions. The scatter plot of performance against annualised volatility shows no clear correlation beyond moderate risk levels, suggesting that higher volatility doesn't necessarily translate to better returns. This raises important questions about portfolio construction and risk management approaches therein.
The Power of Data Feeds
These revealing visualisations are made possible through FE fundinfo's uniquely comprehensive and flexible MPS data feeds. Our bottom-up construction methodology captures complete historical trading data, rebalancing information and charges across the market, enabling wealth managers to generate powerful insights like these.
Through API integration and customisable delivery, firms can seamlessly incorporate this intelligence into their existing systems and workflows. And these insights represent just a fraction of what's possible with comprehensive market data. The ability to see these patterns—and more importantly, to understand how your strategy fits within them—will be crucial for catering to today’s data-driven investor.
Ready to discover how these insights could transform your strategic planning?
