The category that includes investment trusts, account for only 0.4% of average holdings in on-platform managed portfolios, while open-ended funds make up 91%.

The finding comes from Morningstar’s UK Managed Portfolio Landscape 2026, which covers 1,745 live portfolios from 79 providers as of September 2026. It found that “new launches have slowed since a 2018-23 boom, but investor flow estimates suggest managed portfolio service (MPS) remains a fast-growing segment of multi-asset investing.”

The financial services and investment research firm said the structure of trusts works against them in this setting, highlighting discounts and premiums to net asset value, liquidity and execution constraints, and limited platform availability are a contributing factor.

The research showed the market moved towards cheap, passive building blocks. Over five years to the end of September 2026, the share of portfolios marketed as active fell from 61% to 38%, as passive and blended approaches grew, with passive funds dominating the most-held lists.

It found the most held fund was the Fidelity Index US, appearing in nearly a quarter of all portfolios. Exchange-traded funds (ETFs) have also grown from a low base, rising from 7.5% to 8.6% of allocations in a year. Active ETFs are still rare, though 15 now appear in at least one portfolio, up from five last year.

Researchers noted that “any revival in active demand may require weaker market returns and more consistent active outperformance, though cost will remain a constraint. Active and blended portfolios use index funds for over half of US equity and government-bond exposure, using active funds where skill is seen to add value.”

Morningstar also found that the median costs have fallen since its first study in 2022, mostly because underlying funds have gotten cheaper. The median active portfolio now costs 0.73%, down from 0.85%, but costs did not change between 2025 and 2026 for active portfolios, and passive portfolios may have hit a floor. Active portfolios still cost roughly three times as much as passive ones.

It also found that portfolios with more equities have fared better over five years, but still struggled against Morningstar’s benchmarks. The most adventurous categories trailed their indexes, while the most cautious beat theirs. 

Morningstar attributed the shortfall at higher risk levels to narrow market leadership, which rewarded benchmark-like holdings, and to the drag from underweighting equities. AQR Managed Futures UCITS remains the most commonly held alternatives fund, while Rathbone Ethical Bond has been among the most-held active fixed-income funds since its first study in 2022.

It noted that there was “less consensus” on the most popular active funds before highlighting ut M&G Japan as “a clear favorite for investing in Japan equity.”

The investment firm said that if providers wanted private markets exposure, the likeliest route is a daily-dealing fund with a capped private assets sleeve rather than a listed closed-end fund.

Tom Mills, principal for multi-asset strategies at Morningstar, said: “The UK managed portfolio market is maturing, but that does not mean demand is slowing.

“We’re seeing providers become increasingly selective about where they pay for active management. Passive funds now do much of the heavy lifting in areas such as US equities and government bonds, while active funds are used where managers believe skill can add more value.

“Open-end funds remain the default holding types, with ETFs and alternatives still in supporting roles. And while competition in UK MPS remains high, the long-running decline in costs shows signs of easing.”