JP Morgan Asset Management has collaborated with digital wealth manager – Nutmeg – to launch Smart Alpha portfolios.
The investment product, announced today, combines the investment expertise of JP Morgan with Nutmeg’s experience across core investment principals, Exchange Traded Funds (ETFs) and fractional investments.
The range of diversified ETFs unites three sources of potential returns, via long-term strategic asset allocation, tactical adjustments around this long-term allocation and smart security selection.
James McManus, chief investment officer at Nutmeg, said: “We’ve joined forces to create a truly pioneering investment product that builds on our core strengths: Nutmeg’s technology and digital investment experience powered by JP Morgan market insights and deep research expertise.”
At the intersection of active and passive management, McManus described Smart Alpha as “a product that aims to deliver superior returns, by giving customers the best of both worlds. A multi-asset portfolio that combines the diversification of a passive approach with an active research driven security selection”.
McManus continued: “Smart Alpha brings the power of active security selection to Nutmeg, giving customers the same level of transparency and control that they know and trust but with the potential to gain excess returns that will add up over time. We’re now able to invest for customers, with the agility to be overweight securities where analysts expect high returns and underweight where they foresee undue risk. This adds a new dimension to Nutmeg’s investment offering.”
Benefitting from disruption
Nutmeg has been operating at a loss for the last eight years, with losses widening to more than £21m last year. Despite this, McManus said: “In just 8 years we’ve built one of the strongest investment brands in the UK with over a hundred thousand customers. But our story’s just getting started.”
However, Nutmeg bucked the global trends and registered a successful first half of 2020, which the firm attributes to the accelerated adoption of digital services, triggered by pandemic restrictions.
On 10 November, Nutmeg reached 100,000 customers after a significant boost between January and June this year. The firm’s revenue also increased by nearly a third. As of 30 June, the firm’s AuM were £2.3bn.
Anjali Grover, managing director at JP Morgan Asset Management, highlighted the sustainable underpinnings of Smart Alpha: “The active part of the Smart Alpha portfolio is environmental, social and governance (ESG) integrated. The active equity ETFs promote sustainable business practices and exclude operators in sectors that many clients tell us they would like to avoid. “
Grover finished: “Crucially, Smart Alpha powered by JP Morgan Asset Management is also underpinned by the same level of transparency and control that Nutmeg champions in all its products, so those who select it as their favoured investment style will always be able to track performance and see exactly where and how their money is being invested.”