Speculation that JP Morgan was interested in tapping into the UK robo advice space has been validated with news its asset management arm is joining forces with Nutmeg to launch five risk-rated portfolios.
Nutmeg’s partnership with the JPMAM multi-asset solutions team is the first time it has employed an external investment team. The Smart Alpha range will also be the robo adviser’s first foray into active funds, with JP Morgan active and passive ETFs populating the portfolios.
The partnership comes a year after former Nutmeg CIO Shaun Port landed at JP Morgan, although a spokesperson from Nutmeg said Port had not been involved in the new initiative. At the time of his appointment, industry commentators speculated whether his hire indicated JP Morgan was looking to venture into the UK robo advice space.
Nutmeg will be responsible for setting portfolio objectives, asset class boundaries and risk constraints, as well as the physical portfolio management, while JPMAM will be responsible for the investment strategy and the weightings of the underlying securities.
Benefits for JPMAM versus Nutmeg
JPMAM is likely to benefit from another distribution channel, a wealth management source told Portfolio Adviser, although they noted Nutmeg is small in the scheme of JPMAM’s large sales team that distributes products globally.
The source questioned what Nutmeg would achieve through the partnership, besides being associated with a global financial services brand. “They are not profitable and now they will have to share fees with a third party.”
The Smart Alpha range is priced at the same rate as Nutmeg’s Fully Managed range: 0.75% for saving pots up to £100,000, and 0.35% above that with an average underlying fund cost of 0.19% and market spread of 0.07%.
Nutmeg CIO James McManus (pictured) said: “Smart Alpha brings the additional 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 from excess returns that add up over time.”
“In addition, the active equity ETFs in Smart Alpha promote sustainable business practices and exclude companies in sectors that many clients tell us they would like to avoid.”
See also: Shaun Port hire fuels speculation about fresh ventures at JP Morgan
