Our latest quarterly video shares the key investment highlights and lessons from 2025, while also exploring the macroeconomic and market backdrop. The team outlines the core characteristics of the service and provides an outlook on what to expect in 2026.
Learn more about our speakers and access a transcript below.
This webinar is for information only and should not be taken as a recommendation or advice on how any specific market is likely to perform. Past performance is not a reliable indicator of future performance.
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Video transcription
Quarterly 2plan MPS performance update
For 2plan advisers using our Managed Portfolio Service
Open to read a transcript of the video
Mike Kempster: Hello everyone and thank you for joining us for our quarterly 2plan MPS webinar. I’m Mike Kempster, Head of London & East Distribution at Rathbones.
Today, we’re joined by, Ronelle Hutchinson, Senior Investment Director at Rathbones for the MPS service, and we are going to be giving you an update on the service and our performance…
-We’ll start with a review of 2025, including market movements and asset class performance.
- Next, Ronelle will discuss Insights and our views looking ahead for 2026 and how we are positioning portfolios for the MPS service.
- I will highlight the key characteristics of our service, and what’s also coming in 2026 from Rathbones.
If you have any questions, please submit them via the Q&A tab on the right side of your screen and we’ll come back to you with a response.
Before we move into the presentation, I’d like to thank you for your continued support with existing and new client introductions. Our strategic partnership with 2Plan is an important one and we want to continue working with you, providing relevant, timely support, adding value and help you to focus on growing your business and delivering good outcomes to your clients….
Video transcription
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Let’s start by looking back at 2025. It was a year of key developments across markets, with themes such as inflation shifts, interest rate movements, and geopolitical events influencing performance across some of the major asset classes.
Looking at the chart, all major asset classes, with the exception of the US dollar currency and Brent Crude in sterling terms, delivered positive returns. Despite the head winds markets continue to reach new highs.
Gold has outperformed by over 50%, driven by geopolitical concerns & tariffs.
The rest of the world has outperformed, whilst the S&P500 was up just over 9% in sterling terms with the US dollar currency down 7% again, in sterling terms.
Ronelle, from your perspective for Rathbones 2Plan portfolios, what were the standout moments in 2025 and how did they influence our investment decisions?
Ronelle Hutchinson: Thanks Mike. For avid market followers, one of the most surprising outcomes of 2025 has been the extent to which the global economy has weathered the US tariff shock. Global GDP data in the chart on the left shows an outlook of slower but resilient growth and in the chart on the right, we show data on new manufacturing orders from the Global Purchasing Manager indices which has rebounded sharply after the dip in the first quarter.
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Learn more about our speakers
Ronelle Hutchinson
Senior Investment Director
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Investment Director
Andrea Yung
Senior Investment Director
Ronelle Hutchinson
I am a Senior Investment Director at Rathbones.
I have over 20 years of industry experience. Most recently as a portfolio manager for Investec Wealth & Investment in their South African office managing a range of multi-manager funds for our private clients. I am responsible for overseeing Rathbones' Managed Portfolio Service on platforms. My focus is to ensure that we deliver consistent investment performance & a proactive service to our advisory clients.
I am responsible for the portfolio management of Rathbones' MPS on Platforms service. Using a structured and disciplined investment framework, our primary focus is delivering outcomes that align with the objectives and risks associated with each MPS strategy.
Investment Director
Andrea Yung
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Slides
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Head of London and East Distribution
Mike Kempster
Quarterly reports
Adventurous
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Balanced
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Cautious
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Defensive
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Moderately Cautious
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On the inflation front, UK inflation has begun to slow after accelerating from 1.7% in September 2024 to 3.8% in September 2025. The latest headline CPI inflation data in October has fallen to 3.6%.
Declining inflation in the UK enabled the Bank of England to cut interest rates over the course of the year which is expected to support growth going forward.
But a complete return to the 2% target by late 2026 could be a tall order with services inflation coming down more slowly.
Generative AI has tremendous transformational potential for economies, and its development and implementation continues to be a major talking point in markets. However, uncertainty around the timeframe for widespread adoption and how successfully this will be monetised remains.
What we do know, from the multi-billion dollar estimates of planned capital expenditure shown in this slide, is that it is going to be expensive.
This magnitude of expenditure has transformed these previously” capital light” stocks into “capital intensive” stocks with downside risks to future cash flow and profitability.
In Europe, Germany published its belated draft budget in July last year, alongside an updated medium-term fiscal plan that confirmed plans for a large, front-loaded fiscal expansion.
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An existing 100-billion-euro special defense fund will continue to be spent up to 2027. It will be complemented by an increase in defense spending in the ‘core’ budget. Bringing the total planned rise in defense spending up by about 0.5% of GDP by 2026, this is a substantial increase.
But it’s on the infrastructure side where the plans are really front-loaded. Here, the planned increase is around 1% of GDP between now and the end of 2026.
However, we are closely monitoring the rollout of this stimulus package just to be sure it’s going to be delivered as promised. But, as it stands, we expect this to be a significant boost to the European economy.
In the final quarter of the year, the 2plan portfolios performed well across the board, with all models outperforming their respective benchmarks.
However, 2025 was indeed a tale of two halves for our models, in the first half repositioning of the portfolios in line with the 2plan SAA changes against a very volatile market backdrop was a headwind.
However, in the second half with those key changes behind us and a clearer outlook on the likely impact of tariffs, we were able to meaningfully reposition the portfolio with improved outcomes.
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Hence for the full year, our lower risk models - Defensive to Moderately Cautious has marginally lagged the peers, while our higher risk models – Balanced and Adventurous have outperformed. But it’s the actual absolute nominal returns ranging from 7% - 14% that investors will appreciate.
When we look back at the drivers of the performance for the year, equity selection was the biggest detractor in a strong environment for risk assets.
Furthermore, fund selection within the UK – specifically Royal London Sustainable Leaders and if you look at Europe our allocation to Blackrock European Dynamic were detractors over the period.
This was to some degree offset by some strong returns in our fixed income space, specifically corporate credit and emerging market debt. Overall, when we look at the portfolio for the full year, we were too defensively positioned in 2025 with an overweight fixed income exposure and neutral equities, in what was a very strong environment for equity assets.
Our income models in 2025 fared meaningfully better given their bias to higher yielding quality equities in the UK and Europe with the Cautious and Balanced Income outperforming and Moderately Cautious Income keeping pace with the peers.
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Mike Kempster: Looking ahead, 2026 is shaping up to be an important year. Ronelle, what major themes, risks, and opportunities do you see on the horizon?
Ronelle Hutchinson: Going into 2026, we are mindful of elevated valuations and earnings expectations in the US. Outside of the US, the UK and Europe reflect better value, however, following the strong returns last year largely driven by a re-rating in price/earnings ratios, the market will be anticipating a recovery in economic growth to support the outlook for improved earnings.
The US market is unusually concentrated by past standards, in the chart on the left, the largest 10% of stocks by market capitalisation now make up over 75% of the total US market and positive performance over recent years has been reliant on the results of a small number of stocks driving these returns.
The chart on the right-hand-side illustrates this. Less than 30% of stocks in the S&P 500 beat the index in 2023 and 2024. In 2025 we have seen a very slight broadening out, but it’s still a narrow market by historical standards.
Given this backdrop, from an asset allocation perspective, we retain our neutral equity position following the strong returns last year. We maintain our overweight exposure to fixed income and alternatives because of risks emanating from exuberant sentiment that is reflected in low credit spreads and overweight retail investor positioning as well as the heightened geopolitical risks.
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The portfolio changes we have made over the quarter are particularly nuanced. We have selectively added to US equities focusing on high quality and cheaper areas of the market that will benefit from improved US growth supported by fiscal stimulus and lower interest rates.
Following Fund manager changes at Janus Henderson European equities we have fully exited this fund in favour of Liontrust which is a style neutral European manager focused on bottom-up stock selection.
Looking at our regional allocation, we are almost in line with the benchmark allocation to US just about 1% overweight. We are neutral UK Equities, overweight Europe and about 1% underweight in Japan and emerging markets.
From a style perspective, over the last year, we have reduced the growth elements in the portfolio and prioritised large cap stocks with a quality and value bias.
Mike, turning to you now.
We know that there are vast range of model portfolios that advisers can choose from, what do you think differentiates our model portfolios vs the competitors.
Mike Kempster: Thank you Ronelle, I appreciate you taking us through those thoughts. Before we look at how we’ve positioned our MPS portfolios accordingly. I’d like to explain a core characteristic of our service - our downside and upside capture.
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With our approach to diversification in the strategies, and our continued aim on delivering robust, risk‑adjusted returns for your clients, we talk a lot about how our return profile is one that has a track record of protecting on the downside and participation in rising markets, this graph demonstrates how we have delivered this for your clients since inception, specifically looking at the moderately cautious portfolio.
Looking at the IA mixed Sector 40-85%, we have achieved just a shade over 90% of the upside potential vs. the sector whilst protecting on the downside.
Whilst continuing to remain active managers across asset allocation and stock selection, we do manage the exposure of our active and passive split. You’ll see that where efficient exposure to markets has been gained this has also helped us to reduce the costs of the portfolio whilst maintaining diversification and exposure to active investment strategies.
Ronelle Hutchinson: There have been a few topical questions that advisers have continuously asked us in the last couple of months which we have endeavored to answer here.
Question: Can the rally really continue? What’s next for 2026, is there risk of a sell off?
That is a really interesting question. In order to answer it we really have to look at the fundamental picture that we see in markets at the moment, this is largely driven by the economic backdrop. There are three key factors that we think could support the rally in 2026.
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As Head of London and East Distribution, my priority is to help professional advisers deliver positive outcomes for their clients, through carefully selected wealth and banking solutions that can be tailored to meet the client's requirements. I work with professional advisers to get to know them, their business and how they build relationships with their clients to gain a strong understanding so that I can best help them. It is also an important part of my role to ensure that they are receiving a high level of service.
I specialise in working with Financial Advisers, Lawyers and Accountants providing business development and relationship management. I aim to add value by helping my advisers grow their business and like to be a sounding board and to suggest ideas to help solve client problems. By understanding my client's needs, I can help bring the right team together to support them delivering innovative investment solutions for their clients.
Head of London and East Distribution
Mike Kempster
I am responsible for the portfolio management of Rathbones' MPS on Platforms service. Using a structured and disciplined investment framework, our primary focus is delivering outcomes that align with the objectives and risks associated with each MPS strategy.
Investment Director
Andrea Yung
I am a Senior Investment Director at Rathbones.
I have over 20 years of industry experience. Most recently as a portfolio manager in Investec Wealth & Investment's South African office managing a range of multi-manager funds for our private clients. I am responsible for overseeing Rathbones' Managed Portfolio Service on platforms. My focus is to ensure that we deliver consistent investment performance & a proactive service to our advisory clients.
Senior Investment Director
Ronelle Hutchinson
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The falling interest rates which should continue to support the economy throughout the year.
The additional fiscal stimulus that is going to be front loaded specifically in the US, could also support the rally.
The sizeable AI capital expenditure that companies are going to continue to deploy throughout this year.
These three factors should support equity markets and ensure a strong likelihood that markets will end the year higher.
Question: Gold has been talked about as the best performing asset class in 2025, how have the 2plan portfolios gained exposure to this?
We haven’t had a material exposure to gold in the portfolios; we’ve accessed this indirectly via our exposure to trojan which is a lower risk multi-asset portfolio. Trojan has had a sizeable exposure to gold in the portfolio, approximately 30% in the fund directly. This is how the portfolio overall has benefited from having an indirect exposure to gold.
Question: What’s been the biggest contributor to performance over the last year?
Ronelle Hutchinson: When we look at the overall portfolio positioning in 2025, we had a really strong view being overweight Europe and that played out quite materially for us and one of our funds which has performed quite well has been the Janus Henderson European equities portfolio. Overall, when we look at the positive contributors for the year this has been one fund which has meaningly contributed to portfolio returns.
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Mike Kempster: Thank you Ronelle for taking us through those updates in the portfolios, it’s really useful to have a look back and look at where we’re going for 2026.
Here’s what’s coming in 2026 for advisers: Enhancements to our Bespoke offering with the introduction of a dedicated Retirement Service for clients of advisers. We launched an Income range of portfolios where you select platform-based solutions to help manage drawdown requirements for your clients. We’re committed to supporting you throughout the year. We continue to provide useful content and thought leadership, helping you support your clients following the Autumn budget, please do visit our dedicated Budget hub.
I’d like to share some thoughts as to why you would work with Rathbones. As explained, we’ll be using our leading research capabilities to leverage across our investment framework and various services, with the combination of Investec Wealth & Investment and Rathbones we have larger research team. Through enhanced Risk management we look to achieve superior long-term risk adjusted returns with greater diversification. Our scale allows us to negotiate cheaper share classes, helping to lower the cost of investing for your clients.
And with dedicated adviser’s support we can demonstrate our commitment to the adviser market helping you to build lasting value and protecting what matters most for your clients so that they can Live Well and Invest Well.
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Please complete our survey which is on the right-hand side of your screen, this feedback really does help shape how we continue to run these sessions.
We look forward to seeing you at the Telford Conference in February, please do visit the stand and say hello to Gerry Lawlor and Steve Armitage.
Thank you again for joining us today. If you’d like to discuss the service further, please contact your usual Rathbones contact who would be delighted to help you. Alternatively, you can contact us using the email address at the bottom of the screen. Thank you.
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