JP Morgan launches risk-rated investment portfolios
JP Morgan plans to scale up its UK investment offering after fresh research revealed a huge frustration among UK retail investors.
The lender found nearly one in six UK investors were unsatisfied with the income they received from investments, despite two-thirds saying the income from investing was important.
The firm is using its Asset Management arm and digital wealth manager subsidiary Nutmeg to launch risk-rated income investing portfolios, which will be tailored to how much risk an investor is comfortable taking.
The new portfolios will offer five different options, each designed for a different level of risk and for different investment timeframes.
JP Morgan will adapt its US exchange-traded funds (ETFS) for UK users to build the platform, allowing investors to access a mix of income-generating investments in one package.
This follows a widespread push from UK regulators to encourage both businesses and investors to broaden their appetite for risk.
City regulator hoping for boost to informed risk
Nikhil Rathi, the chief executive of Financial Conduct Authority, wrote in City PM in March highlighting ambitions to “build people’s trust” in order to provide the “confidence to take informed risks”.
The City regulator has been vocal in plans to drive “informed risk” that would help boost economic growth.
Dame Julia Hoggett, the boss of the London Stock Exchange, has also called for the UK to change its “perverse” attitude towards retail investment, which she said reflected a broader problem with risk.
Earlier this month, City PM reported the FCA had pledged to put the “P back in IPO” as it hoped to boost retail investments.
Nutmeg said the new portfolios will offer an “innovative smoothing feature” that makes income payments more regular, helping to deal with the issue of dividends being paid at different times and allowing “greater consistency”.
James McManus, chief investment officer at Nutmeg, said investors were “frustrated” with currently available options.
“Most people invest so their money will, one day, be working harder than they are.
“While that day may be further off for some, we know that many people want a regular, consistent income stream from their investments that can provide more flexibility in life today,” McManus added.