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.

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 see how they compare to some other UK robo-advisors like Moneyfarm*, for example.

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 5 main investment products. These are the Nutmeg Stocks and Shares ISA, Pension, General Investment Account, Lifetime ISA and Junior ISA.

How Nutmeg Works

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, Fixed Allocation Portfolio and they also now run a socially responsible portfolio.

When investing with Nutmeg, there are no setup or exit fees, no withdrawal fees and no trading fees.

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 0.17%.

While the fees on Nutmeg’s Socially Responsible Fund are the same as they are on the fully managed portfolio, the underlying fund costs are higher at around 0.32%.

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?

Nutmeg requires a minimum investment amount of £500 for their Stocks and Shares ISA, pension and General Investment Account. For their Junior ISA and Lifetime ISA it’s a minimum of £100.

Why is this? It’s simply to make it possible for the company to create diversified portfolio on your behalf.

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.

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 2019/20 tax year the amount you can put into an ISA is £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 elsewhere.

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.

The minimum investment amount to start a pension with Nutmeg is £500. 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 £500.

The Nutmeg Lifetime ISA & Junior ISA

Nutmeg now also offer a Junior ISA and a Lifetime ISA.

The Lifetime ISA 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.

A parent or guardian can open a Junior ISA with Nutmeg if the child is under 16. The current amount you can invest in a Junior ISA each year per child is £4,368, with tax-free interest on returns.

Alternatives to Nutmeg

There are now many more robo-advisors operating in the UK. This has increased competition in the sector, which can only benefit you the investor! Here are links to a couple of our other UK robo-advisor reviews.

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.

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