As Head of Operations of Nucleus Wealth, I enjoy dealing with client queries and questions on a daily basis. I like to think that all the information we have put together helps people get a really good idea of what we do and how we can help them, but there is always more we can provide.
So in that I thought I might put together a list of commonly (and sometimes not so commonly!) asked questions, with responses, that I have come across and that you might like to know yourself. Please enjoy.
The fees are 0.64 %. Are the fees the same regardless of which product we select?
Yes, we have decided to charge a flat 0.64% across all funds and asset classes. This is predominately to simplify understanding for our investors, but also to ensure that our movements in the portfolio are understood to be for your interests, and not just to move to a higher paying asset class.
Are there any other fees that get added to this from any other of the companies involved in managing the funds?
The fee schedule in the Letter of Engagement / Statement of Advice is what is charged. The only variance may come from our estimates of initial brokerage, where we have estimated the high water mark (as the trades are grouped, this can change given the number of clients involved in the weekly bookbuild, generally for the better).
The PDS doesn’t state how often and when the fees are calculated – Can you please clarify? At what point in time is the total value of our holdings re-calculated. On what basis is the total value of our holding determined?
Fees are calculated daily and charged by Linear Asset Management monthly in arrears. Please see page 19 (right hand pane) of the PDS (here) for more detail.
Are then any exit fees that apply should we decide to exit our investments with Nucleus Wealth?
There are 2 options for exit.
‘Hard Exit’ which would involve an immediate sale on market and liquidation of the portfolio. Brokerage would be costed at the ‘Self Directed’ fee schedule ($22 Aust / $35 International)
‘Soft Exit’ in which we would try to minimise the above brokerage over one to two weeks by matching your exit with another clients entrance, and with our weekly bookbuild overall. This would see overall brokerage closer to the usual 0.11% Aust / 0.22% International that we achieve generally.
It would come down to how quickly you would like to sell down, then I can organise from there.
Are there any restrictions that are placed on withdrawing from our investments with Nucleus Wealth should we decide to do that at some point in terms of timing or process?
All stocks are held beneficially in your name and are always in highly liquid markets. We have no capacity to ‘freeze’ or hold any of your investments in any way. Basically, you advise on your preference in how you would like to exit and I can execute this for you.
If we decided to contribute more to our investments with Nucleus Wealth at some point are there any entry fees payable?
Common question! Always happy to accept more, just transfer to the ANZ account, and every week we review excess cash holdings. From there we will start reinvesting with that week’s respective bookbuild. No extra costs, just the brokerage for those trades.
What is the process and restrictions that apply if we wanted to switch between products. For example switch from International shares to Australian, or switch into cash?
Moving from one portfolio to another is simply an instruction, email preferred. Keep in mind we bookbuild once a week, and that there will be brokerage to consider. Other than that its a fairly easy process from our end.
If we choose the Core International option – there is no tactical component to this asset allocation – is there any mechanism available via Nucleus Wealth that would alert us to a need to re-consider the allocation if for example there was an international downturn?
We can’t promise a mechanism as such, however with regular posting on this site, monthly reports and other online publications we do I would suggest that this could serve as this notice?
Remember that the Core International portfolio provides coverage to the other 98% of world markets and that in the event of one major market looking worrisome, it leaves a lot of other ones to find value.
In the Core International model are the share parcels bought and sold regularly? Will we get to see the current shareholding through the portal?
We are expecting Core International portfolio turnover of around 20-30% pa. in the current environment. Obviously, in poorer times, we may need to raise this. As an investor, you have full visibility through the Linear client portal, which gives you full transparency of your portfolio, cash holdings and fees/transactions.
We are currently working on getting this portfolio information into our Nucleus Wealth Portal, including extra information such as our stock analysis and asset dashboard for your account. It is going to be remarkable, please stay tuned.
In future, if you manage super, could these balances be pooled?
Unfortunately, we cannot pool these accounts as the accounting for the trustee would become a nightmare. Thankfully, as our brokerage is charged on a % basis, it doesn’t cost any more to have 2 accounts anyway. Also, from a risk perspective, it is generally a better idea to have separate accounts, when different timeframes for investment are involved.
Can you explain what is the basis for the benchmark performance figures in the Nucleus Investment Guide (i.e. CPI + 3.5% for foundation etc)?
In regards to the benchmark figures, we have picked a similar benchmark to the Future Fund that reflects the risk level in the portfolio. We had the option of a ‘blended index’ figure or CPI+, and have opted for CPI+ to help simplify comprehension of the internal risk levels of each model.
Can you please enlarge on the relationship between Integrity Private Wealth and Nucleus Wealth management and the role that each of them would play in managing our money? Which entity is ultimately accountable for managing our funds?
Integrity Private Wealth is an affiliate company who provides our AFSL (and associated insurances etc). The two directors, Simon and David, sit on our asset allocation committee and offer an additional viewpoint from their combined 40 years in the investment management industry. They have their own discrete investment advice business.
Ultimately the accountability of any investment outcome rests with Damien Klassen, David Llewellyn Smith and the team at Nucleus Wealth.
Tim Fuller is an Authorised Representative of Integrity Private Wealth Pty Ltd – AFSL 436298.