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The Masteralloy (MA) alloying route has a great potential for reducing the alloying costs in sintered steels, while allowing the introduction of innovative alloying systems. However, in order to achieve an efficient use of the alloying elements, the particle sizes needed are often below 25 µm, which means that for standard gas atomization a significant fraction of the batch has to be discarded or at least recycled. This work evaluates the performance of steels containing MA powders obtained with a novel atomization technique (Ultra-High-Pressure Water atomization) that allows the production of low-cost powders with low oxygen contents, rounded morphologies and mean particle sizes as low as 6 microns. Mechanical properties, dimensional variations and interstitial contents were measured in steels containing different MA compositions sintered at either 1120 °C or1250 ºC in N2-5H2 atmospheres. Already with less than 3 wt.% of alloying elements these steels present excellent combinations of properties, reaching strength levels of 560-915 MPa and hardness 220-260 HV10, combined with elongations of 1.3-3.2% and impact energies around 20-30 J/cm2.