Nutmeg AUM Analysis

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.Nutmeg

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.