Nutmeg Review

Nutmeg Review


In this Nutmeg review we take a close look at the UK digital wealth manager, to help you decide if they are the right robo-advisor for you in 2019.

We look at who Nutmeg are, the products they offer, how they work and importantly how much they charge.

At the end of the review we’ll also look at some alternatives to Nutmeg such as Wealthsimple, so that you can be sure you are making the right choice.

Who are Nutmeg?

Nutmeg are a UK investment firm who were founded in 2011 by a stock market broker who had become frustrated by the lack of transparency in the investment world, and the fact that stock market investing seemed to be something that was only available to wealthy individuals.

The basic idea behind the company was to strip out all the unnecessary costs associated with investing. Nutmeg aim to make investing accessible to a wider variety of people. This could be those who might only have a relatively small amount of money to invest. They also appeal to those who have very little experience of stock market investing.

Since its launch in April 2011, the company has gone from strength to strength and has won several awards. You may have even seen its recent television advertising campaign.

How does Nutmeg work?

Nutmeg are an online discretionary investment management company. This basically means that they make all the investment decisions for you.

All you need to do is set up an account with Nutmeg and answer a few questions about your investment goals and your attitude to risk. Nutmeg will then do the rest by creating a balanced portfolio on your behalf.

Nutmeg currently offer 3 main investment products. These are the Nutmeg Stocks and Shares ISA, Nutmeg Pension and they have recently added a Lifetime ISA.

What are Nutmeg’s Fees?

The Nutmeg fee structure is simple and easy to understand.

At the time of writing, you can invest through either a Fully Managed Portfolio or a Fixed Allocation Portfolio. When investing with Nutmeg, there are no setup or exit fees, no withdrawal fees and no trading fees. You can also look at these fees laid out on a simple chart on the Nutmeg Website.

With a fully managed portfolio, you will pay an annual management fee of 0.75% on the first £100,000. Anything over that will be charged at 0.35%. You will also pay an average of 0.19% annually on costs associated with the funds Nutmeg invest your money into.

For a fixed allocation portfolio, the fees are even lower. These are 0.45% on the first £100,000 and 0.25% on anything over that. The extra fund costs on fixed allocation portfolios are around 0.18%.

It’s worth mentioning here that the Nutmeg Pension is only currently available as a fully managed portfolio.

How does this compare to investing with a typical wealth manager? Nutmeg state that if you invest with them then you’d save between 0.29% and 0.94% per annum on management fees. This could really add up, not just in the short-term but also the long-term when compounding kicks in.

What is the Minimum Investment Amount?

It’s important to know that each investment pot that you create with Nutmeg requires a minimum investment amount of £500 for their Stocks and Shares ISA.

Why is this? It’s simply to make it possible for the company to create diversified portfolio on your behalf. If you invest less than £5000, then you’ll be asked to contribute a minimum of £100 per month.

Those who would prefer to start with a lower amount may want to check out another leading UK robo-advisor in Wealthsimple*, as they currently have no minimum investment amount and they also offer a Stocks and Shares ISA.

If you are looking to set up a Nutmeg Pension*, then the minimum investment amount is £5000.

The Nutmeg Stocks and Shares ISA

So far in our Nutmeg Review we’ve explained who Nutmeg are, how they work and the fees they charge. Now it’s time to take a closer look at the investment options they offer. We’ll start with the Nutmeg Stocks and Shares ISA.

The Nutmeg Stocks and Shares ISA is a tax-efficient way of investing in the stock market. Any gains made are free from income and capital gains tax. In the 2018/19 tax year the amount you can put into an ISA has increased to £20,000 per year. You can choose to invest all of this into a Stocks and Shares ISA or split it. You could split it across a Stocks and Shares ISA, Cash ISA, Lifetime ISA or Innovative Finance ISA.

With a Nutmeg Stocks and Shares ISA, you don’t choose which companies you specifically want to invest in. Nutmeg will instead create a portfolio for you based upon your own goals and your attitude to risk. You can also transfer your existing ISA to Nutmeg if you wish to do so.

For a more in depth look at the Nutmeg Stocks and Shares ISA, take a few moments to check out our Nutmeg Stocks and Shares ISA review.

The Nutmeg Pension

With the Nutmeg Pension, the investments Nutmeg choose for you will again be based upon your own personal goals and also the level of risk that you are comfortable with.

It’s worth remembering here that you don’t get to pick your own investments with Nutmeg, so if you want to enjoy the potential benefits of picking your own shares and funds then you may want to look at the Hargreaves Lansdown SIPP* instead.

When setting up your Nutmeg Pension, they will ask you a few important questions. This will help them to get the information that they need to build the right portfolio for you. As we mentioned earlier, the minimum investment amount to start a pension with Nutmeg is £5000 and this can be funded via your bank account or by transferring your existing pension over to Nutmeg, provided it has a value of at least £5000.

The Nutmeg Lifetime ISA

Nutmeg are also one of the few companies to currently offer the newly available Lifetime ISA. The Lifetime ISA was launched in April 2017 and it allows you to invest up to £4000 per year. You can then receive a top up bonus of 25% from the government towards your first home or retirement.

Nutmeg Alternatives

If after reading this you feel that Nutmeg aren’t quite right for you then you might be wondering if there are any UK alternatives to Nutmeg? The answer to this question is yes and due to their having no minimum initial investment amount, one company you might want to look at is Wealthsimple*.

Wealthsimple operate in much the same way as Nutmeg and they offer a Stocks and Shares ISA too. Wealthsimple’s fees are also lower than Nutmeg’s. Wealthsimple charge 0.7% + ETF costs for investments of up to £100,000, dropping to 0.5% for investments over this amount. Not only this, but we’ve also managed to secure a special new investor offer for Money Bulldog readers where you can get your first £5000 of investments managed free of charge for the first year if you sign up for a Wealthsimple account* using one of the links in this post!

Are Nutmeg Right for You?

Now that you have all the information the important question is, is Nutmeg the right investment option for you? Hopefully this Nutmeg review will have gone some way to answering your questions.

If you want to invest in the stock market in a truly hands off way, then setting up an account with Nutmeg could prove to be a great option for you. The fees Nutmeg charge are low, their past performance is good. They also have a website which is easy to navigate and that all-important mobile app for you to download, so that you can stay up to date with your account on the go.

If you’d prefer to pick your own funds and shares to invest in, then you might prefer to look at an ISA or share dealing account from a company like Hargreaves Lansdown* instead.

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