Nutmeg Review
What Is Nutmeg?
Nutmeg was founded in 2011 by Nick Hungerford and William Todd.
It was designed to remedy the problems they saw in the investing world which was:
- Lack of transparency
- High management fees
- Too much technical jargon
- Too exclusive
- Lack of simplicity
By getting rid of the bad aspects of wealth management, Nutmeg positioned itself in such a way that’s allowed them to grow exponentially.
This growth has allowed the company to build up a specialist team of experts to help manage client’s portfolios.
These factors, in conjunction with its customer-focused business model, have earned them some important accolades over the years.
Here are a few examples:
- Endorsement from the UK government
- Average customer referral of 2 or more
- Multiple stocks and shares ISA awards
- 36% share of the UK’s digital wealth management market
So it’s fair to say Nutmeg knows a thing or two about looking after and growing your money.
That said, is it the right fit for you?
Let’s progress further through this nutmeg review and find out.
Portfolio Options
When it comes to investing your money with Nutmeg, you have a choice of portfolios to choose from which align with your risk tolerance.
Once you’ve undertaken the test and determined your risk profile, you can select which portfolio version you would like.
The options are:
- Fixed allocation portfolios
- Fully managed portfolios
- Socially responsible portfolios
- Smart Alpha Portfolios
According to Nutmeg, setting up your portfolio only takes 10 minutes and after that, you can leave it to their staff.
This seems very much in line with the company’s philosophies that I touched on earlier about making investing simple and accessible.
Before we move on with this Nutmeg review, let’s take a look at each one in some more detail.
Fixed Allocation Portfolios
Fixed allocation portfolios are the automated option of the bunch which suits individuals looking for very low management fees.
You’ll also benefit from a globally diversified portfolio initially chosen by a team of professionals.
It will then be reviewed once a year by an expert, meaning no higher costs are incurred like that associated with fully managed portfolios.
Therefore, Nutmegs automatic rebalancing software will essentially manage your investments for you.
Nutmeg describes it as-
‘A set and forget style’
With the difference being the science behind how it’s set.
Fully Managed Portfolios
When it comes to fully managed portfolios with Nutmeg, you have the option of 10 different variants.
Which one you choose will be down to your risk tolerance.
This portfolio style is aligned with someone who wants qualified experts to have a hands-on approach with their investment money.
The portfolio is comprised of ETFs, which essentially give the investor exposure to a pool of investments.
The benefit of this is you don’t have to buy each stock individually, which is widely considered to be a higher-risk play.
So you’ll have a diversified portfolio that is regularly managed by experts.
This means that strategic changes to your investments based on news etc can be made by a member of the team.
Of course, this comes at the price of a higher management fee (more on this later).
Socially Responsible Portfolios
Just like fully managed portfolios, you have the option of 10 different socially responsible variants to choose from.
Socially responsible portfolios simply mean portfolios that consider environmental and ethical factors above all else.
Again, the portfolio will consist of ETFs but with companies that aren’t undertaking ‘controversial activities’.
Management will be ongoing, meaning you can kick back and relax knowing your money is in the hands of experts.
That also means tweaks and strategic adjustments may be made if experts see it beneficial to do so.
Smart Alpha Portfolios
Smart Alpha portfolios were made possible through Nutmeg’s recent allegiance with JP Morgan.
This portfolio combines Nutmeg’s core investing principles with JP Morgan’s extensive asset management expertise.
It will contain a mixture of ETFs but is unique to the other portfolios in that it introduces research-driven security selection.
A number of active and innovative ETFs will also be incorporated into the portfolio- drawing on JP Morgan’s experience in this field.
Management is ongoing but will merge experts from Nutmeg and JP Morgan together to monitor your investments.
Investment Products
Nutmeg is not limited to portfolio management and in fact, offers a nice range of investment products.
These investment products/accounts are all available with the portfolio styles stated above.
Let’s briefly take a look at each one.
Stocks & Shares ISA
Nutmeg offers a stocks and shares ISA which will be monitored ‘in-house’ by experts at Nutmeg.
All you need to do is choose your investment style and take a test to establish your risk tolerance and you’re good to go.
Perks of opening up a stocks and shares ISA with nutmeg are:
- Set monthly deposits into your account
- Open an account with £500 or more
- Highly transparent- you’ll know where your money is invested specifically
- No exit fees
- Easy to change investment style and/or risk tolerance via the app
- Access 24/7 to your account
These are just a few reasons why Nutmeg is a popular option when it comes to stocks and shares ISA providers- winning multiple awards.
General Investment Account
General investment accounts are exactly what they sound like.
This investment product is typically utilized when someone has reached their £20,000 yearly deposit limit in their stocks and shares ISA.
Therefore a general investment account acts as a further way to invest your funds in the market.
However, the big difference is unlike a stocks and shares ISA, your returns are subject to tax (currently 20%).
But just like the stocks and shares ISA, your portfolio will be picked by experts, it’ll be easily accessible and globally diversified.
Pension
Putting aside the technical jargon, a pension is simply a tax-efficient way of saving for your retirement.
Here is a look at some of the key features of Nutmeg’s pension accounts:
- Start with as little as £500
- 25% top-up from the government
- Designed by experts
- Easy to transfer existing pension over to Nutmeg
- 24/7 access
- Offer pension drawdowns
Please note that pensions with Nutmeg are no different from conventional personal pension accounts in terms of rules/guidelines.
Junior ISA
Junior ISAs are a long-term, tax-efficient way of investing in your child’s future.
Just note that the child you are opening an account for must be under the age of 16.
You would have complete control of the account until they reach 18, where it will be transitioned over to them fully.
The current limit you can deposit into the account for this upcoming tax year is £9,000 (ending 5th April 2021).
Although funds can’t be removed (unless a significant event occurs) from the account until they reach the age of 18, any gains are not taxed.
Junior ISA’s with Nutmeg include features like:
- Start with as little as £100
- Designed by experts
- No exit fees
- Change risk tolerance and/or investment style at anytime
Account Fees
As I stated earlier, one of Nutmeg’s key aims was to demystify the world of investing.
They have done this by being completely transparent about their fees.
These fees are split into 3 categories, which are:
- Investment fund fees
- Management fees
- Market spread fees
Now, believe it or not, most wealth management companies also charge for stuff like:
- Performance fees
- Exit charges
- Entry charges
Investments with Nutmeg exclude all these additional ways to take client’s money which is good news for its investors.
Let’s look at the fees involved in each account side by side to give us a clearer picture of how much it would cost you.
| Fixed Allocation | Fully Managed | Socially Responsible | Smart Alpha | |
|---|---|---|---|---|
| General Investments Account | 0.45% up to £100k, 0.25% beyond +Average investment fund cost: 0.17% +Average market spread: 0.07% | 0.75% up to £100k, 0.35% beyond +Average investment fund cost: 0.19% +Average market spread: 0.07% | 0.75% up to £100k, 0.35% beyond +Average investment fund cost: 0.31% +Average market spread: 0.07% | 0.75% up to £100k, 0.35% beyond +Average investment fund cost: 0.19% +Average market spread: 0.07% |
| Stocks & Shares ISA | 0.45% up to £100k, 0.25% beyond +Average investment fund cost: 0.17% +Average market spread: 0.07% | 0.75% up to £100k, 0.35% beyond +Average investment fund cost: 0.19% +Average market spread: 0.07% | 0.75% up to £100k, 0.35% beyond +Average investment fund cost:0.31% +Average market spread: 0.07% | 0.75% up to £100k, 0.35% beyond +Average investment fund cost: 0.19% +Average market spread: 0.07% |
| Personal Pension | 0.45% up to £100k, 0.25% beyond +Average investment fund cost: 0.17% +Average market spread: 0.07% | 0.75% up to £100k, 0.35% beyond +Average investment fund cost: 0.19% +Average market spread: 0.07% | 0.75% up to £100k, 0.35% beyond +Average investment fund cost: 0.31% +Average market spread: 0.07% | N/A |
| Lifetime ISA | 0.45% up to £100k, 0.25% beyond +Average investment fund cost: 0.17% +Average market spread: 0.07% | 0.75% up to £100k, 0.35% beyond +Average investment fund cost: 0.19% +Average market spread: 0.07% | 0.75% up to £100k, 0.35% beyond +Average investment fund cost: 0.31% +Average market spread: 0.07% | 0.75% up to £100k, 0.35% beyond +Average investment fund cost: 0.19% +Average market spread: 0.07% |
| Junior ISA | 0.45% up to £100k, 0.25% beyond +Average investment fund cost:0.17% +Average market spread: 0.07% | 0.75% up to £100k, 0.35% beyond +Average investment fund cost: 0.19% +Average market spread: 0.07% | 0.75% up to £100k, 0.35% beyond +Average investment fund cost: 0.31% +Average market spread: 0.07% | 0.75% up to £100k, 0.35% beyond +Average investment fund cost: 0.19% +Average market spread: 0.07% |
As you can see, the fees in proportion to what you get are perfectly reasonable.
You can find more details on Nutmeg’s fees here.
Nutmeg’s Performance
Throughout this nutmeg review, we have looked into portfolio styles and different investment products provided by Nutmeg.
It would be silly to not then look at the performance of Nutmeg over the past few years.
After all, returns are considered to be a key factor for many people when determining which wealth management company they go for.
Below you can look at Nutmeg’s returns in accordance with all risk tolerances (1 being lowest risk).
(Note: These returns are from the inception of each portfolio type respectively and simulated results based on Nutmeg’s trading data ).
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Fixed Allocation | +9.5% +2.4% AR* | +17.3% +4.2% AR* | +22.2% +5.4% AR* | +26.1% +6.2% AR* | +30.7% +7.2% AR* | N/A | N/A | N/A | N/A | N/A |
| Fully Managed | +7.7% +0.9% AR* | +23.0% +2.5% AR* | +32.8% +3.5% AR* | +42.4% +4.4% AR* | +51.8% +5.2% AR* | +58.4% +5.7% AR* | +71.6% +6.8% AR* | +81.9% +7.5% AR* | +93.8% +8.3% AR* | +100.4% +8.8% AR* |
| Socially Responsible | +2.2% +1.0% AR* | +7.4% +3.2% AR* | +10.7% +4.6% AR* | +13.8% +5.9% AR* | +15.6% +6.6% AR* | +17.0% +7.2% AR* | +17.7% +7.5% AR* | +19.5% +8.2% AR* | +20.9% +8.8% AR* | +22.0% +9.2% AR* |
| Smart Alpha | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
* These figures represent the annual compound rate.
You’ll notice there is no returns data in relation to smart alpha portfolios- this is because the partnership with JP Morgan is recent news (Novemebr 2020).
Is Nutmeg Safe?
Nutmeg keeps your investments safe by utilizing what’s known as a custodian bank.
A custodian bank put simply, is a specialized financial institution that safeguards securities.
Nutmeg just so happens to use State Street which is one of the largest custodial banks in the world.
Your investments will be held in a segregated account, protecting you from the unlikely event that either nutmeg or state street go bust.
In the event Nutmeg can’t fulfil its obligations, any investments you have up to £85,000 are protected by the Financial Service Compensation Scheme (FSCS).
It should also be noted that your funds are protected from being lent to third parties, adding another layer of security.
So it’s fair to say that Nutmeg takes the safety of your money very seriously.
Nutmeg Reviews
As with all my reviews, I like to include opinions to arrive at a more well-rounded conclusion.
This Nutmeg review is no exception.
When checking out Nutmeg’s Trustpilot page, you can see in the image below they have an overall rating of excellent.
Positive Nutmeg reviews include things like:
- Transparent
- Low cost
- Good service
- Simple
Negative Nutmeg reviews tend to be centred around the withdrawal time of funds.
Average refunds via the Nutmeg app take between 3-7 days which is a fair transition time.
However, I can understand if you need the money quickly for emergencies or a big event such as buying a new house.
Nutmeg FAQS
Is My Money Safe With Nutmeg?
Your assets are protected by the Financial Services Compensation Scheme (FSCS).
So yes, your money is safe with Nutmeg and protected in the event they go bust.
Who Can Invest In Nutmeg?
Anyone can invest in Nutmeg- all you need is £100 to start if you are opening up a Junior ISA or Lifetime ISA.
If you are looking to invest in any other investment products Nutmeg offers, you’ll need £500 to start with.
Is Nutmeg Good For Beginners?
Nutmeg is good for beginners who want a ‘handoff’ approach to investing.
In other words, if you’d like your portfolio managed by experts and not have to do any work yourself, Nutmeg could be a good option for you.
Can You Buy Shares On Nutmeg?
Yes, you can open a Stocks & Shares ISA with Nutmeg or transfer an existing one to them.
However, since the portfolio is managed, you don’t buy the shares yourself.
How Does Nutmeg Make Money?
Nutmeg makes money through fees charged for managing customer’s investment portfolios.
Is Nutmeg Better Than Moneybox?
Both offer a similar service but Nutmeg offers a wider variety of options- both in terms of investment vehicles and individual tolerance to risk.
Final Thoughts On This Nutmeg Review
Drawing this Nutmneg review to a close I hope you’ve found this article interesting.
Once more that you have a much better idea about whether or not Nutmeg is a good fit for you.
They provide many investment products- some of which have won awards- with positive feedback from clients on the whole.
That being said, is it for everyone?
Of course not, otherwise everyone would use nutmeg.
From my assessment it seems to be a good fit for people who fulfil 1 or more of the criteria below:
- You are new to investing
- You don’t want to manage a portfolio
- You’d rather experts handle your money
- Looking for a personalized and professional experience
Nutmeg is a solid choice -perhaps one of the best- when it comes to digital wealth management.
If you enjoyed this Nutmeg review, please feel free to leave a comment down below and tell me your thoughts on Nutmeg.
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Until next time!
