Assets in discretionary Managed Portfolio Services (MPS) have grown by 25% over the past year and 11% in the past six months, according to research and consultancy firm Nextwealth.

This compares with growth of 5.3% in underlying platform assets during the same year-on-year period.

The market for discretionary on-platform MPS has grown £15bn since the end of September.

The report also confirmed that fee pressure for discretionary MPS has flattened out, with the average total cost falling 4 bps in the past 12 months and remaining flat over the past 6 months.

Between 2021 and 2024 the asset-weighted average total cost (MPS fee + OCF) paid by the client almost halved from 1% to 0.54%.

A key response to fee pressure in recent years among DFMs has been the increased use of passives, fuelled by growth in low-cost tracker portfolios and use of passive funds in hybrid portfolios.

In the latest set of Nextwealth data, the shift to passive has plateaued, with assets in passives dipping to 42% as some fully active DFMs have experienced strong asset growth.

The top five DFMs by net asset growth in the past six months were Quilter Wealth Select, Tatton, Timeline, Omnis and Brooks Macdonald.

The top five by percentage growth were Blackfinch, Marlborough, Aspen, LGIM and Omnis.

Heather Hopkins, managing director of Nextwealth, said: “While Quilter Wealth Select and Tatton continue to capture an outsized share of assets in discretionary MPS, the market remains vibrant and competitive. Firms with different business models and different pricing structures continue to experience strong growth.

“Among the fastest growing firms are service-led firms, low-cost passive providers, vertically integrated wealth managers and firms offering a higher-cost active solution. This points to a healthy and competitive market.”

• The MPS proposition report is available on the Nextwealth website.