Profits continue to elude Nutmeg as assets pass £1bn

Robo-adviser Nutmeg has passed the £1bn assets under management mark.

The firm says it has roughly doubled both funds and client numbers since September 2016. Nutmeg now has around 48,700 customers.

However, the digital wealth manager has struggled to make a profit since launching five years ago. Its 2016 losses amounted to £9.3m, up from £8.9m in 2015.

Its sustainability has been called into question by some in the industry including fee transparency campaigners Gina and Alan Miller.

Nutmeg chief executive Martin Stead says: “We are proud of what we have achieved since 2012, but this is just the start and we are gearing up for further rapid growth. Our business is fundamentally about helping people to achieve their big goals in life – such as buying a house, paying for education, saving for a rainy day and preparing for retirement. This is a major responsibility that we take seriously, and we are on track to build a long-term business, which delivers on our mission to empower generations of investors.”

Nutmeg’s model has been evolving, however, adding regulated advisers to its team to help develop its algorithms. It has also simplified its fee structure on several occasions, cutting charges on higher value portfolios and reducing the minimum lump sum investment required.

For a fixed allocation portfolio which cuts out the need for a Nutmeg manager, the cost is 0.45 per cent for the first £100,000 and 0.25 per cent thereafter.

Nutmeg claims the launch of the automatically rebalancing portfolios made it the first to online wealth manager to offer both a fixed allocation product and a managed portfolio service.

Other portfolios can charge up to 0.95 per cent though.