Nucleus Wealth

Nucleus looks to add value to your portfolio through market leading asset allocation coupled with a stock picking focused on quality and stable returns rather than chasing the latest growth story. 

Supported by a  team of experienced analysts, the key focus for Nucleus over the next few years is managing investment allocation following record low interest rates and demand shortages globally. Closer to home, the Australian investor is facing the aftermath of historic resources and property booms that have distorted numerous facets of the Australian economy. 

The situation is not “normal”. You need an investment solution that adapts, from analysts who anticipate future conditions.

There are many ways to achieve investment success. At Nucleus we look to three main factors:

Forward thinking Asset Allocation

The first decision to make is whether to invest in Australian Shares, International Shares, Bonds or to seek the safety of cash.

Many financial planners use “strategic” asset allocation. This is an admission that asset allocation is hard and essentially avoids making a decision by using long term weights. Which is fine. If you don’t mind waiting for 20 years for averages to re-assert themselves.

At Nucleus, we believe a more active approach is warranted. Australia is going through an unprecedented period without an economic recession. The economy is struggling to adjust following the largest commodity boom that Australia has seen. Australian property prices are at record highs. Your portfolio should reflect this.

Smoothing the cycles

There are funds that try never to lose money. The problem is that this comes at a cost to performance – you give up a lot of upside to protect from the downside.

At the other end of the spectrum, there are funds that use debt to supercharge returns. Unfortunately, the supercharging works in both directions – losses can be supercharged as well as gains.

At Nucleus, our investment strategy is to “smooth the cycle”. We look to limit the downside without being so conservative that we lose sight of the upside.

A mixture of Quality and Value

When it comes to choosing stocks, there are once again lots of different strategies.

At Nucleus, we look to blend measures of quality and value to choose the best stocks. We look to buy high-quality stocks at reasonable prices and cheap stocks that aren’t low quality.

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There are a few ways that investment portfolios should be customised to suit you:

Ethics

We have ethics. Integrity, honesty, reliability.  However, when it comes to investing the questions become more nuanced and the answers often depend on the individual.  

For example, some people like nuclear power for the efficiency and carbon reduction benefits. Other people believe the risks to the environment and contamination are too high.

At Nucleus, we don’t dictate the ethics. You choose from 19 different ethical overlays over your portfolio so that we don’t buy stocks that conflict with your beliefs.

Risk Level

You have a choice. Higher longer term returns but wilder portfolio movements or a steadier but lower return.

Most financial planners claim to customise your risk level, and then proceed to invest your portfolio into one of four or five standard risk categories.

Nucleus considers risk to be a spectrum of outcomes and manage each client’s risk individually.

Income Needs

Generally, receiving income from shares or bonds is less tax-efficient than capital gains. However, many high-quality shares pay significant dividends and so a balance needs to be struck between the amount of risk, your income needs, the quality of the stocks and your tax outcome.

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Ownership and planning are key to great investment.

 Is the structure safe?

The investment platform used at Nucleus is designed to provide a solution that is safe. The assets are held in custody on your behalf by JPMorgan Chase & Co, one of the worlds largest banks, ensure that your assets are where they are meant to be. Nucleus instructs the bank where to invest the funds but has no access to withdraw funds.

The biggest recent scams of recent times – Madoff in the US, Astarra in Australia – did not have separate custodians. Make sure your investment manager has one. And a reputable one.

Is the structure transparent?

The investment platform used at Nucleus is transparent. Every stock, every bond, every trade. Full transparency.

What shares do you own? How much trading does your manager do? If you have multiple managers/funds are they doubling the risk, or maybe taking offsetting bets so that you will lose either way?

Nucleus wants to invest the core or nucleus of your wealth. But we understand that you will own other assets like houses or private businesses. You may have a share trading account or other financial advisors. That is why we give full transparency: you can see every share, every bond and every trade on your portfolio.

Is the structure tax efficient?

One major frustration of using managed fund investments is the inability to move your individual assets without selling down and potentially exposing yourself to a tax liability.

While managed fund structures offer a number of benefits, one of the key criticisms is the treatment of tax. When your money is pooled with other investors, the tax is also pooled. While you may invest and then hold for a long period of time, others may be coming and going, and the trading that takes place to put new investors into the fund and exit old investors can have tax consequences for you. When funds are growing this can work in your favour, when they are shrinking it often goes into reverse.

Nucleus uses a separately managed account structure. Your assets, in your name, with your tax liabilities and benefits. No one else’s trading will affect your tax situation.

Franking credits are in your name. Tax Deferrals? In your name. Capital gains discounts? In your name as well.

This means that our clients can be assured that their investments can be tailored to their personal requirements, and any tax efficiencies from minimising capital gains and maximising franking credits belong completely to them.

If you ever decide to leave Nucleus, you can take your shares with you – no need to pay capital gains tax or trading costs just because you want to change managers.

Is the structure cost efficient?

The investment platform used at Nucleus allows transfers of individual shareholdings in and out of your portfolio, negating the need to ‘sell down’ and worry about capital gains tax or trading costs.

On top of that we ‘bundle’ share trades to make sure that our clients pay a fraction of brokerage found elsewhere.

 

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Whilst engaging professionals to look after any part of your life is going to cost money, it should not mean the difference between a great and a less than ideal retirement. At Nucleus, we strive to keep costs low by cutting out the many middlemen that reside in most of the current investment options available today.

If you choose to invest with Nucleus there are two fees that are charged:

• A management fee paid to Nucleus for making the investment decisions of 0.64%.
• A platform fee paid to a 3^rd party platform provider, not related to Nucleus. This money provides you with custodial services, tax reporting, online access and trading. The fee varies depending upon the amount invested (our PDS has full details), indicatively an investor with $200,000 would pay around 0.50%, an investor with $2m would pay around 0.30%.

• Brokerage Costs. We have secured very low-cost brokerage. 

  For example, investing the minimum amount in the Tactical Foundation fund which comprises 35 holdings, held individually in your name, carries an initial brokerage cost of $80. That’s 35 trades for the cost of a couple at a retail broker.

  For those looking to invest internationally, the minimum investment in our Core International portfolio (comprising 70 quality global companies) will cost around $400 in total initial brokerage. 

Costs are important.

Our mission is to provide a technology-based investment solution that delivers portfolio tailoring, transparency and world-class investment research to our clients whilst sharing the cost efficiencies that come with not needing a branch on every corner.

As an investor with Nucleus, you only pay the costs associated with your account, not for the managed pool as found in other alternatives, and take advantage of the minimised worldwide brokerage and administration costs that come with using a platform that is not owned by a large institution.

When you apply, we provide a full breakdown of the costs for your investment.

 

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