Nucleus to sell DFM business

Nucleus to sell DFM business
Photographer: Chris Ratcliffe/Bloomberg

Nucleus is in the process of selling its discretionary fund manager ‘Nucleus IMX’, which formally launched just a month before the advised platform was bought by James Hay’s owner Epiris.

The company, which was bought out again by HPS this year, has narrowed down its sale search to two potential buyers, according to a source.

A Nucleus spokesperson told FTAdviser it is "in dialogue" with third parties but that no decisions have been taken just yet.

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“We’ve decided IMX is better placed in a partnership model, where a third party takes on the running of the proposition, but that it’s still available through Nucleus Wrap," the spokesperson said.

“Such a partnership would allow IMX to receive the ongoing commitment and focus it deserves, retaining it as a valuable option for advisers alongside our other solutions, while enabling us to concentrate on our priorities of investing in our platform, service and price."

FTAdviser understands Nucleus is yet to decide whether this sale would mean the DFM’s team and its assets leave the platform.

The IMX team is headed up by former Redington executive, Jonny Letham, who joined the platform in April 2019.

There are three people in the permanent team besides Letham. These include investment analysts Robert Njoroge and Daniel Boyd, as well as investment operations analyst Lewis McWilliams

The team also consists of two independent committee members, Carole Judd and Carol Young, and Nucleus’ chief financial officer, Stuart Geard.

Since the platform’s sale to James Hay’s owner, responsibility for IMX has sat under Alex Kovach, the chief commercial officer of Nucleus.

Having soft launched in August 2020, IMX formally launched in January 2021, just weeks before Epiris announced its acquisition of Nucleus for £145mn.

Nucleus said the decision to sell was based on wanting to ensure it spends energy and resources "on the right proposition"

“As you would expect, since Nucleus and James Hay came together we’ve been working to ensure we’re spending our energy and resources on the right proposition for the advisers we serve," the Nucleus spokesperson said.

"As part of a strategic review, we’ve been exploring where IMX, our in-house DFM, fits. Fundamentally, we believe our proposition should be completely independent of investment solution, where we offer a range of models for advisers so they can offer the best value outcomes for their clients and deliver their long-term goals."

Initially, some advisers were reluctant to support the platform’s foray into the DFM world due to the timing of the launch coinciding with a change in ownership.

They feared the new investment proposition might not align with Nucleus’ corporate proposition going forward.

Nucleus IMX consists of 23 portfolios, 12 of which were designed for clients focused on investment growth, and 11 of which were designed for clients focused on taking a regular income.

IMX’s service charge is 0.15 per cent, while its asset charge comes to 0.30 per cent, meaning its total portfolio charge amounts to 0.45 per cent.