Nutmeg’s three-year results: How we delivered great returns for our customers

Shaun Port
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We recently confirmed our first set of three-year performance figures. This is a significant milestone for Nutmeg and I’m delighted to say we have delivered excellent net returns for our customers since launching to the public in October 2012. This proves the value of having an intelligent, high-quality – and most importantly long-term – investment strategy.

Investment returns across our ten model portfolios

When comparing the results of UK wealth management firms, Nutmeg’s returns beat the competitor average over the three-year period to September 2015 (shown as ‘All time’ in the chart below), across our model portfolios. This is using data from the independent and industry-standard analysis run by Asset Risk Consultants (ARC), as at 30th September 2015.

What’s more, we are in the top 25% best-performing investment management firms for both our cautious portfolios and our high-risk portfolios.

The ARC analysis includes firms such as Barclays, Coutts, JP Morgan, UBS and Rathbones – many of whom won’t manage your money unless you’ve got a huge amount to invest. In fact, by our calculations, the average minimum investment across firms who contribute to the ARC survey is £820,000. With Nutmeg, you could start today with just £1,000.

How we performed against competitors

After taking out our average annual fee rate of just 0.82%, our model 5 portfolio, which aims for moderate growth without extreme volatility, returned a simulated 20.4%, compared to the median 17.6% (as shown in the chart below).

results Jan 16

How we calculate the returns: the returns are regarded as simulated as they do not represent a single customer account or an average of customer returns. The data is calculated using actual Nutmeg trading data from customer accounts, using actual trades carried out at market prices, and is based on an account size of £25,000. The returns are calculated after fees, including both the weighted average rate paid by Nutmeg customers of 0.82% per annum including VAT (as at 30 September 2014) as well as the underlying fund costs (averaging 0.19% per annum). Dividends have been included on an accrual basis. Source of price data: Bloomberg, Macrobond AB. Past performance is not a reliable indicator of future performance.

The competitor data is based on results published by Asset Risk Consultants (ARC), as at 31st December 2015.

Please bear in mind that these figures are for performance for October 2012 to September 2015, so if your investment dates with us don’t match this period, then these will not reflect your portfolio returns.

This illustrates the fact we have a credible and impressive track record of investment performance. Here’s how we did it.

The Nutmeg approach

At the core of our investment strategy, we have an established process whereby we review the investment assets in all customer portfolios regularly. Every day we’re closely tracking a whole raft of economic data – inflation trends, interest rates, stock prices, business reports, employment figures, and so on.

We then adjust where our customers’ money is invested as we identify opportunities for good potential long-term returns, always making sure we spread risk by investing in a wide range of assets, industries and regions.

We’re focused on long-term goals. We’re not in the business of day-trading or taking high risks on sudden price movements. That’s a foolish game in our view. And that’s why we believe it’s important to sustain a long-term vision which gives you the best chance of enjoying reliable returns over three years, five years, ten years and beyond.

Our strategy

So, which investments delivered such great returns? Well, over the three years, we have made a number of adjustments to customer portfolios as we see financial markets ebb and flow, and new economic trends emerge.

You can see the full evolution of those decisions in the chart below, which shows the investment mix in a typical medium-risk portfolio (model 6) since we launched.Asset mix of Nutmeg model 6 portfolio since launch to Nov 2015

Source: Nutmeg data, based on a model 6 portfolio, 30th September 2012-30th September 2015

At a very top-line level, we have consistently favoured US and UK stocks as the global economy has slowly recovered since 2008. They have proven to be an excellent investment for Nutmeg customers. And we’ve generally been very cautious on emerging markets.

We’ve invested quite significantly in Japanese stocks too and our portfolios have really benefited. Returns from Japan have been excellent, particularly throughout 2014. And we’ve seen good results from investing in Italy, Indonesia and the eurozone at appropriate times, as well as shifting our stance on bonds as markets moved.

We’ve also worked hard to keep costs low as this simply improves our customers’ net returns. We can’t stress enough the importance of low investment fees. We look for high quality, low cost exchange-traded funds and then we seek to trade as efficiently as we can. Over the past three years we have made sure our customers are invested in the best funds to do the job.

See how we’re doing

Remember, we always publish our latest portfolio performance figures, after fees, on our website.

Risk warning: As with all investing, your capital is at risk. The value of your portfolio with Nutmeg can go down as well as up and you may get back less than you invest. Past performance is not a reliable indicator of future performance.

 

Shaun Port

Shaun Port

Shaun is the chief investment officer at Nutmeg. He has over 25 years’ experience developing and implementing investment strategies for clients ranging from central banks to pension schemes to charities and private individuals. Shaun holds a degree in Mathematical Economics from the University of Birmingham and is a Chartered Alternative Investment Analyst. He can be found tweeting @ShaunPort.

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