Transact – BlackRock MPS & Growth
2024 was an exciting year that saw the Transact – BlackRock MPS reach its second anniversary and assets more than doubling over the period. The service delivered strong, (top quartile) performance against its peer group whilst maintaining the models within their respective volatility targets. BlackRock conducted four strategic rebalances, ensuring portfolios stayed aligned with market conditions and client goals.
The continued growth in Discretionary MPS
When we launched in 2022, we reported that assets managed by third-party Discretionary Investment Managers (DIMs) had more than doubled on our platform over the previous three years, and in 2024 we’ve seen that trend continue. Let’s rewind seven years to see the full picture.
At the end of 2017 the total assets managed by DIMs on Transact stood at £2.5bn, around 8.5% of total FUD. This figure was dwarfed by assets held in Adviser own ‘in-house’ models or investments outside of a DIM or Model, which accounted for £12bn (40.5% of FUD) and £15bn (51% of FUD) respectively.
Fast forward to October 2024 and the total assets managed by DIMs on Transact has grown over seven times to a whopping £18.9bn, 29% of total FUD, very nearly equal to assets held in ‘Adviser own models’ at £20.4bn (dropping to 31% of FUD). We think this is significant. More and more advice firms are choosing to outsource their investment solution to third-party DIMs, the vast majority of these in the form of an MPS.
From our conversations with you there are some recurring themes driving these trends:
Lower DIM fees and more choice. We have seen significant price disruption with several new investment managers entering the market and DIM fees continuing to fall year on year. At the same time, we have seen greater use of passive funds and DIMs using their scale to access institutional pricing within portfolios – further reducing costs for investors. Once considered an ‘expensive’ option DIMs can now potentially offer considerable economies of scale and cost savings.
Increased regulation, most recently in the form of the Consumer Duty, is driving many advice firms to reassess their investment proposition and ultimately decide to outsource. This shift is largely due to heightened expectations and compliance burdens that advisers face under the new regulatory framework. Outsourcing to a DIM can potentially help by delivering professionally managed, cost-effective, and risk aligned portfolios aimed at delivering good client outcomes and reducing the regulatory burden through expert oversight and comprehensive reporting.
The growth in financial planning, has shifted the emphasis away from advisers ‘selecting funds’ towards providing a comprehensive client-focused approach. Many firms have evolved their client proposition by prioritising goals-based planning, cash flow modelling, tax optimisation and estate planning. By outsourcing to DIMs, planners can allocate more time to delivering high value advice and strengthening client relationships.
When selecting a DIM to partner with, performance, costs and the credentials of the investment manager consistently feature as the top criteria for selection.
It’s certainly worth noting that whilst we see the trend to outsourced investment solutions continuing, it’s not for every firm or all clients. There are some key considerations for advice firms with many firms electing to run investment portfolios in-house.
How can the Transact – BlackRock MPS help?
If you are considering outsourcing or reviewing your current investment proposition, we’d love to have a chat to see how the Transact – BlackRock MPS could support you and your clients. We see three key differentiators:
- Expert risk management & oversight – The service draws on the deep level of investment and risk expertise across BlackRock to determine the optimal asset allocation for each model portfolio.
- Globally diversified & dynamic asset allocation – The underlying investments offer exposure to a broad range of markets across multiple asset classes to offer a globally diversified solution.
- Cost effective investment charges – the ongoing charges figure (OCF) will vary between models but is capped at 0.20% at the point of rebalance and BlackRock’s investment manager fee is 0.06%.
There are several ways the Transact – BlackRock Model Portfolio Service (MPS) can support you. These include our range of engaging investment material, regular investment commentaries, due diligence reports and free access to BlackRock’s portfolio analysis tool – Portfolio 360.
Get in touch
A big thank-you for the great discussions, feedback, and of course your support to date. We very much look forward to working with you in 2025. If you’d like to receive our regular performance updates and market commentaries, as well as details of our forthcoming investment webinars, just drop us an email to sign up to our MPS Newsletter.
If you would like to discuss this or any aspect of the service, please contact:
Ben Roberts (Transact MPS Manager)
Mobile: 07717 846574,
Email broberts@integrafin.co.uk,
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