A “significant gap” remains between the strongest and weakest fiduciary manager growth portfolios, despite all portfolios delivering positive returns in 2025, XPS Group has revealed.

The firm’s Fiduciary Manager Review 2026 analysed 21 growth portfolios managed by 15 fiduciary managers, covering more than 90 per cent of the UK fiduciary management market.

According to the report, the strongest-performing portfolio returned 15.3 per cent in 2025, while the weakest-performing portfolio returned 8.1 per cent, representing a 7.2 percentage point performance gap.

While this is broadly in line with the 7.3 per cent range seen in 2024, it is narrower than the 12.9 per cent gap in 2023, suggesting FMs have been tilting away from more defensive positions in recent years.

XPS said the findings showed that high allocations to equities did not always translate into the strongest outcomes, despite another robust year for growth assets.

Instead, it argued that portfolio construction, implementation and active management played a “meaningful” role in determining returns.

The report found that all fiduciary managers delivered positive absolute returns over the year, with many outperforming their stated targets.

However, returns against targets ranged from 0.4 per cent below target to 8.1 per cent above target, which XPS said reinforced the need for trustees to challenge whether benchmarks remained appropriate.

XPS also highlighted variation between model growth portfolios and actual client outcomes.

It noted that, for some fiduciary managers, model portfolio returns exceeded those achieved by any real client portfolios, reflecting the impact of factors such as liquidity constraints, cashflow requirements and legacy assets.

The firm argued that this underlined the importance of looking beyond headline model returns when assessing fiduciary managers.

XPS Group head of fiduciary management oversight, André Kerr, said: “2025 was another strong year for growth assets, and all fiduciary manager growth portfolios delivered positive returns.

"However, our analysis shows there was still a significant gap between the strongest and weakest performers.

“Trustees need to understand not just what return has been delivered, but how that return has been achieved. As schemes become better funded and more consider long-term run-on strategies, strong oversight is more important than ever.”

The report also showed that some fiduciary managers outperformed equity benchmarks while taking materially lower risk, which XPS said demonstrated the diversification benefits available in fiduciary management portfolios.

In addition, the analysis suggested that periods of market stress continued to expose the widest dispersion in performance between managers, with XPS identifying monthly return gaps of as much as 13.9 per cent, seen during the volatility period in October 2022.

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