These range from multi-manager funds and multi-asset funds – or sometimes a combination of the two – to model portfolio and discretionary fund management services.

S&P Capital IQ noted in its latest asset allocation sector trends report that multi-asset funds with strict mandates tended to outperform their flexible peers during 2012.

The research suggested fully flexible asset allocation funds might have been expected to perform better at a time where controlling risk exposure in the first half of the year and taking more risk in the last six months was key to improving performance.

Instead, it claimed multi-asset funds that were constrained by their mandate performed better. It noted that funds within the global neutral in euro peer group returned 8.9 per cent in 2012, while those in the flexible peer group returned just 6.7 per cent. Meanwhile, funds in the global neutral US dollar peer group returned 8.7 per cent, compared to an 8.4 per cent return by the global flexible US dollar funds.

While the outperformance is not significant, it raises the question of where advisers should be putting their clients, not least because research conducted by Investment Adviser suggests the best-performing vehicles in the Mixed Investment sectors were funds of investment trusts, while some cautious funds sat at the bottom of the table.

To help advisers sift through the sometimes overwhelming choice, Defaqto last month launched a Diamond Ratings system to help advisers identify where managed funds sit in the market.

The system splits funds into two groups – those that are return-focused and those that are risk-targeted – and the ratings from 1 to 5 are based on a number of criteria, including fund performance and competitiveness in areas such as cost, scale, access and manager longevity.

“Our research indicates that managed funds have evolved into two distinct groups: return focused and risk targeted,” says David Cartwright, head of insight at Defaqto. “However, many advisers have continually fed back to us that it has been a real challenge to make fair and relevant comparisons in this market.

“Therefore, we have introduced our Diamond Ratings as a mechanism for independently assessing managed funds, to help advisers see where they sit in the market, and to compare funds on a clear and consistent basis.”

With outsourcing to these types of propositions likely to get more popular in the future, more tools like Defaqto’s rating system will be needed to make the lives of advisers that little bit easier.

Nyree Stewart is deputy features editor at Investment Adviser