Nutmeg Scotland Trade Shows Recent AUM Growth
Nutmeg received significant publicity yesterday when it announced it was reducing its exposure to UK equities, and particularly sterling, in anticipation of a possible ‘Yes’ vote in the Scottish independence referendum. Anecdotal evidence suggests the publicity was effective, with a significant bump in new investments yesterday. However, just as interesting is what the comment from CEO Nick Hungerford that ‘the total value of the trades was north of £50m’ says about Nutmeg’s AUM.
According to Nutmeg’s statement to investors, the changes to portfolios were as follows:
- Selling all holdings in FTSE 250 ETFs in favour of S&P Small Cap 600 ETFs
- Selling currency hedged S&P 500 ETFs in favour of non-hedged versions
- Trimming holding of FTSE 100 ETFs
Based on the current investment breakdowns of Nutmeg’s 10 portfolios, these trades will have affected roughly 39% of the highest risk, level 10, portfolio, gradually diminishing down to 3% of the level 2 portfolio. The lowest risk portfolio, level 1, which according to yesterday’s press reports makes up 15% of portfolios, was not affected as it does not hold any equities.
Assuming a roughly even distribution of AUM across the other portfolios, this suggests that 16% of Nutmeg’s AUM was affected by the £50m ‘Scottish’ trades. Assuming both purchases and sales were included in the £50m figure, this would put total AUM at £155m. If Hungerford referred only to purchases, total AUM would be £310m.
Either way, Nutmeg has seen a significant increase in its AUM in the 8 months since it closed the books on its 2013 accounts, which were reported last week. Annual revenues of £104k suggested AUM of c.£40m at the end of last year, according to The Platforum’s Holly Mackay. This week’s figures suggest they’re likely to be 4 times that figure. Still not enough to turn a profit even based on last year’s costs of £3.8m, but very much moving in the right direction.