Dynamic Planner has worked with MSCI to fill a void in the multi-asset space so that advisers and investors can compare a portfolio’s performance to a risk-targeted benchmark.
The MSCI Multi Asset Indexes – Dynamic Planner Module is a series of 10 composite indices based around the financial planning system’s model portfolios. They will include a mixture of equities, bonds and property.
Dynamic Planner CEO Ben Goss (pictured) said the firm had worked with index provider MSCI to fill a void in the UK advice space and said the benchmark would be much more useful for advisers than comparing performance with “the UK’s largest 100 shares in a bull market or cash in a bear market”.
The indices will remain helpful benchmarks for portfolios that invest beyond equities, bonds and property as it enables those investment managers to show the value that is added by using alternatives, Dynamic Planner said.
The index history will go back to 30 September 2005. They will be rebalanced each month.
Each bucket will be made up of a number of underlying indices. In the equities bucket, for example, the benchmark will include the MSCI UK, North America, Europe ex-UK, Japan, AC Asia Pacific ex-Japan and Emerging Markets indices, with the international equity indices being denominated in sterling.
Comparing funds on a like-for-like basis had been near ‘impossible’
“Until now, there has not been a credible way in which to show this,” Goss said, adding the FCA asset management market study had brought to the fore the importance of demonstrating returns for the risk taken by the investor.
He continued: “The Dynamic Planner Indexes will quite literally transform the way in which advisers and investors are able to review and track the performance of funds against a given risk profile. Currently fund managers can choose and select their own benchmark from thousands of options.
“The problem with this for investors is that it makes it almost impossible for funds to be compared fairly on a like for like basis. The Dynamic Planner Indexes overlay a consistent framework that can be used to really get under the bonnet of a fund, properly understand its risk profile.”
MSCI head of wealth for EMEA Steven Kowal said: “There has been a longstanding demand in the wealth marketplace for multi-asset class indexes that can serve as benchmarks for portfolios that are primarily risk-targeted rather than return-targeted. Sector and other peer-group averages can provide general guidance but can be too broad and not replicable.”
Dynamic Planner said the indices were one element of its multi-million pound programme of investment into software announced earlier in 2019.
