Leading economist John Kay backs Nutmeg

Leading economist John Kay has backed the first online discretionary investment manager

Mr Kay, who published the Kay Review of Equity Markets and Long-Term Decision Making last year on behalf of the government, has made a “substantial personal investment” in the company and will act in an advisory capacity.

Nutmeg was set up by co-founders Nick Hungerford and William Todd as “an alternative” to traditional wealth management offerings and the company said it had seen “huge growth” in client numbers since the implementation of the RDR.

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Mr Kay said: “To some degree RDR may bring down the cost for investors, however, what we’ve been seeing is intermediaries employing a range of devices to minimise the impact, that don’t actually make that much difference when it comes down to it.

“Investors need a simple choice when it comes to intermediation, and development in online technology is the best way of making this happen.”

Mr Kay said Nutmeg provided a “better version of intermediation” by giving a complete aggregation of an investor’s holdings and related the underlying investments to clients’ risk preferences “rather than simply being in effect an execution only vehicle”.

Nutmeg said it charged a 1 per cent or less management fee but did not charge upfront, withdrawal or transaction costs. It added management fees could be reduced as low as 0.3 per cent and clients could invest in a “diversified portfolio” from £1,000.