Fiduciary managers delivered strong returns on growth portfolios last year, with the majority outperforming stated target returns according to XPS’s latest review of the sector.
Its Fiduciary Manager Review analyses 17 UK fiduciary management firms with the strongest performing portfolio delivering a 12.5 per cent return in 2024. XPS says this was driven by a resurgence in equity markets, led by technology stocks.
However its analysis showed there was significant divergence among fiduciary managers (FMs) with a 7.3 per cent difference between the highest and lowest performers.
This divergence was especially evident in the first and last quarters of 2024, reflecting market volatility during those periods. This analysis only looked at performance during 2024 and does not cover the increased volatility in markets seen during 2025.
XPS says that on a risk-adjusted most FMs outperformed diversified growth funds over one-year and five-year periods. However, not all FMs added value, emphasising the importance for trustees to carefully assess the cost-benefit of active management and tactical asset allocation.
The report also found there was discrepancy between actual scheme growth portfolio returns and the model portfolios presented by FMs. Many actual portfolios underperformed relative to their model counterparts, raising questions about the appropriateness of growth portfolio targets and the alignment of model assumptions with real-world outcomes.
XPS head of fiduciary management oversight André Kerr says: “Despite 2024 being a favourable market for most growth assets we still have seen a divergence in performance from FMs and a wide range of outcomes for pension schemes.
“Since the end of February 2025 markets have been exceptionally volatile, with the volatility expected too continue through 2025. We expect that the performance of FMs and the experience of clients to be vastly different and may see a reversal of some of the performance of FMs seen in 2024.”
