Nutmeg will not only enhance your pumpkin pie, it will also enhance your wealth.
A British startup called Nutmeg launched its online investment manager today. It takes the place of professional investment advisors by building customized financial portfolios for anyone with a little money to invest.
Users start by answering a couple questions about their investment goals, comfort taking risks, time frame, and how much money they have to invest. From there, the team at Nutmeg determines a balance of investment they think is appropriate.
Money is generally distributed across multiple asset classes, including equities, bonds, and commodities. The goal is to create a diversified portfolio, based on the users’ assets, interests, and risk profile, that will yield the highest returns.
While clients allow Nutmeg to make investments for them, they still retain visibility and control of their funds. People have full access to their portfolio online, can realign their preferences, and add or subtract money at any time.
Investing in securities is either time-consuming, if done independently, or expensive, if done through a firm. Nutmeg strives to be a flexible online alternative. It is available to anyone with just £1,000 to invest, but can accommodate much larger budgets as well. People can establish a fund for a specific purpose, like a wedding, or in lieu of traditional portfolio management options.
“The financial services industry is in the midst of the biggest upheaval since the Great Depression,” said CEO Nick Hungerford. “Governments and regulators around the world are setting new standards, established institutions are fighting to stay alive, and meanwhile, users of the financial system are unhappy. We are determined to rebalance the power in favor of the investor.”
Hungerford formerly worked as an investment manager and private banker, but he grew frustrated with the exclusivity and lack of transparency. While studying at Stanford Business School, he caught the startup mentality and realized he could use technology to “democratize” the field.
“Financial services is one of the few industries to have withstood the internet revolution,” said investor Tim Draper. “I’m convinced that Nutmeg is the right company to bring democracy and transparency to a sector which is ripe for reform.”
While Draper is based in the United States, Nutmeg only operates in the U.K. market at the moment. Hungerford began working on the product in 2010 and after two years of research, development, and fundraising, it is open for business. The company has raised a total of $5.3 million in venture funding, led by U.K. firm Pentech and chairman of Armada Investment Group Daniel Aegarter.
It is authorized and regulated by the U.K.’s Financial Services Authority and has partnered with Pershing, a custodian bank that holds the money. Hungerford said both these connections serve to establish trust with the customers, as does the experience of the investment team.
In the U.K., the principal competitors are offline incumbents such as stockbrokers, private banks, and investment firms. For those people without significant assets to invest, Hungerford cites the largest obstacle as apathy and a lack of time.
These are also the primary deterrents in baking, and in both cases, Nutmeg is here to help.
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