The rise in popularity of Vanguard’s LifeStrategy 60% Equity multi-asset investment solution with advisers in 2023 challenges the myth that the old fashioned 60/40 strategy has had its day after a tough 2022, according to a new report.

Vanguard dominated Defaqto’s top 10 most recommended multi-asset investment solutions in 2023.

Vanguard's LifeStrategy 60% Equity and LifeStrategy 80% Equity took first and second place with 24% and 19% of recommendations respectively.

Andy Parsons, insight manager (funds & DFM) at Defaqto, said: “Often perceived as the alternative solution for advisers who prefer not to use an MPS proposition, the top 10 is dominated by just four providers. The Vanguard LifeStrategy range is clearly the preferred solution of choice, with three of the range within the top five and one from the Sustainable stable in sixth place. And of the other three providers, BNY Mellon, HSBC, and Royal London are each represented by two funds.

“Intriguingly, despite so much being written over the past couple of years about how much money has been withdrawn from ESG style solutions, three of the top 10 are sustainable solutions, clearly showing that the end client does still wish to consider this as an integral part of their overall investment portfolio. With the upcoming regulatory changes around the new FCA SDR labels coming into force later in the year, it will be interesting to see which of the four new labels becomes the preferred investment solution of choice among advisers and their clients.”

Top 10 Multi-Asset Solutions

Source: Defaqto

Timeline Portfolios’ Classic 50 solution was the most recommended MPS investment solution in 2023, with an 18% share of recommendations through Defaqto’s Engage software for Financial Planners.

Brewin Dolphin, Tatton, and Waverton all performed well with each having more than one proposition making the top 10.

All of the top 10 MPS solutions are placed within the Defaqto risk rating scale of 5-7. A rating of 1 represents the lowest risk; 10 indicates the highest risk.

Mr Parsons said: “As the table clearly shows, there are a variety of investment solutions being chosen across a multitude of varying styles and risk levels. Providers, such as RBC Brewin Dolphin, Tatton and Waverton are represented more than once, with Tatton having the most with three propositions.

“In an advisory world where time is becoming an even scarcer resource, due to an ever-increasing regulatory workload, clients rightly expect investment solutions that deliver in terms of associated risk, performance, and cost. Advisers are understandably seeking out investment solutions where all the tough challenges of asset allocation, geographical and sector preference, growth versus value and mega cap versus small is done for them.”

Top 10 MPS Solutions

Source: Defaqto 

For single asset investment solutions, Terry Smith and his Fundsmith Equity fund proved to be the most recommended single asset fund in 2023, followed by HSBC American Index. Within the active vs passive debate, active edged it by six solutions to four.

Only one debt fund made the top 10 in the shape of the Royal London Corporate Bond fund. 

Top 10 Single Asset Solutions

Source: Defaqto 

Defaqto’s data includes over 18,000 funds, 2,700 DFM MPS portfolios, platforms and products. The fintech’s adviser solution, Defaqto Engage, sees recommendations of £42bn annually go through the system.

Defaqto claims that its Engage software is used by over 30% of financial advisers in the UK.