Nutmeg – In Brief
Nutmeg is a digital investment platform, launched in the UK in 2011. They claim they are the ‘largest digital wealth manager in the UK’. They differ from some other investment apps such as Freetrade or Trading 212 in that they rather than allowing customers to trade, the company gives a range of options related to your risk levels and the type of investment you want, then does the trading for you. In this way they essentially act as a ‘robo-advisor’.
Table Of Contents
Nutmeg Pros & Cons
Pros:
- As a robo-advisor, Nutmeg runs your investments cheaper than a human financial advisor would.
- Nutmeg works well for those who wish to have little involvement with the management of their investments.
Cons:
- If you want to trade individual stocks and shares, then Nutmeg is not for you.
What is Nutmeg?
What is a robo-advisor?
A robo-advisor is essentially the same as a financial advisor, but rather than be given investment advice by a person, the platform uses their automated systems and algorithms to invest for the customer.
Nutmeg Features
Nutmeg offer the following products:
- General Investment Account
- Stocks & Shares ISA
- Lifetime Isa
- Junior ISA
- Pension
Once you have set up which of these you require, you then need to create ‘pots’ to put your investment funds into. You can create as many pots as you wish.
You can then choose the type of investments you want to put into it. Nutmeg focus very much on Exchange Traded Funds (ETFs).
Nutmeg have 4 different investment ‘styles’ that you can choose from:
- Fully Managed – These funds are managed by the Nutmeg investment team.
- Smart Alpha – these funds are managed by JP Morgan Asset Management (part of the bank that owns Nutmeg).
- Socially Responsible – Includes only investments that are seen as socially conscious, and managed by the Nutmeg investment team.
- Fixed Allocation – unlike the other 3 fund types, these are designed to perform without regular management, and are only reviewed once per year.
Each of the above fund types has a different pricing structure, which we outline below.
Finally, Nutmeg will ask you the level of risk you wish to have, as that will determine which funds they invest your funds into. Each different product will have a different range of levels, but it will usually be something like 1 to 5 or 1 to 10, with 1 being the lowest risk, and the higher number being the higher risk. You can change the risk level on each of your pots at any time. Obviously your returns will depend on which risk level you choose.
In addition to the above automated funds, Nutmeg also offer in-person financial advice.
Who is Nutmeg for?
As a robo-advisor, Nutmeg do most, if not all of the work for you. If you are someone who wants to get into the details i.e. researching which stocks and shares to buy, then Nutmeg is probably not for you – you would be better off using a low-cost trading app such as Trading 121 or Etoro, or a larger trading platform like Hargreaves Lansdown.
Nutmeg would really suits those who want to just put in their money, and then leave it to grow over time.
Nutmeg invest your money mainly with ETFs, which are designed to diversify the individual stocks and shares within them, and show long-term growth, so it does make sense to have a longer term investment goal i.e. years or even decades long, to get the best out of Nutmeg.
Nutmeg Costs & Fees
Nutmeg costs are divided up into 3 types:
- Nutmeg Costs
- Fund Costs
- Market Spread
The level of these costs depends on which investment style you choose. The amounts are an annual percentage of the total amount you have invested.
Fully Managed:
Nutmeg Costs – 0.75% up to £100k, 0.35% on amount above £100k
Fund Costs – 0.20%
Market Spread – 0.07%
Total Cost – 1.02% up to £100k, 0.62% on amounts above £100k. For a total investment of £50,000, this would cost £510 per year.
Smart Alpha:
Nutmeg Costs – 0.75% up to £100k, 0.35% on amount above £100k
Fund Costs – 0.23%
Market Spread – 0.07%
Total Cost – 1.05% up to £100k, 0.65% on amounts above £100k. For a total investment of £50,000, this would cost £525 per year.
Socially Responsible:
Nutmeg Costs – 0.75% up to £100k, 0.35% on amount above £100k
Fund Costs – 0.28%
Market Spread – 0.07%
Total Cost – 1.1% up to £100k, 0.7% on amounts above £100k. For a total investment of £50,000, this would cost £550 per year.
Fixed Allocation:
Nutmeg Costs – 0.45% up to £100k, 0.25% on amount above £100k
Fund Costs – 0.19%
Market Spread – 0.07%
Total Cost – 0.71% up to £100k, 0.51% on amounts above £100k. For a total investment of £50,000, this would cost £355 per year.
Is Nutmeg Safe?
Nutmeg is fully regulated by the Financial Conduct Authority (FCA) in the UK. As part of the FCA’s rules for investment companies, Nutmeg have to keep all customer funds completely separate from their own company funds.
In addition, customer funds held in investments with Nutmeg are covered by the Financial Services Compensation Scheme (FSCS). This means that in case of their insolvency, each customer is covered up to £85,000.
Nutmeg provides investments. Therefore it is crucial that all customers are aware of the risks inherent in any investment. There is always the risk losing money, and it is even possible to lose all of your investment. However, with Nutmeg, as they focus on ETFs, this is less likely as your investment is diversified rather than concentrated in single stocks and shares.
Nutmeg Customer Reviews
Nutmeg has a rating of 4.1 out of 5 on Trustpilot from over 1200 reviews. 74% of the reviews are rated 5 out of 5 – Excellent. These satisfied customers praise how easy the service is to use, and how they can invest with a minimum of fuss. 9% of the reviews rate Nutmeg as 1 out of 5 – Bad. These unhappy users largely complain about poor performance of investments, with some being unhappy about issues not being resolved satisfactorily by customer service.
Nutmeg Alternatives
Other robo-advisor investment platforms out there include Moneyfarm and Wealthify.
Read our Nutmeg vs Moneyfarm comparison
If you wish to be more hands on with your trading, you can look at platforms such as Freetrade, Trading 212 or Etoro.
Nutmeg FAQ
Is Nutmeg a good company to invest with?
Nutmeg have been trading for over 10 years, and are a UK company and fully regulated by the UK regulator. They publish the results of their investments on their website so you can see if the returns they have achieved in the past are what are looking for (although bear in mind that with investments, past performance does not predict future performance).
What happens if Nutmeg goes bust?
First of all, bear in mind that it is unlikely that Nutmeg would go bust. They are owned by JP Morgan, which is one of the world’s biggest banks. If it did happen however, customer funds are covered by the FSCS to up to £85,000 per customer, so any amount up to that will be protected. Under UK FCA rules, Nutmeg have to keep all customer deposits separate from their company money, so unless things went seriously wrong, investments should be safe even if Nutmeg did get into trouble.
How much do you need to invest in Nutmeg?
The minimum amount you need to invest depends on which Nutmeg product you choose.
- For general investment accounts, ISAs and pensions, the minimum investment amount is £500.
- For lifetime ISAs and Junior ISAs, the minimum investment amount is £100.
Can you withdraw from Nutmeg at any time?
Yes, you can request to withdraw your funds from Nutmeg. However, bear in mind that it can take between 3 and 7 days (and sometimes more) to get the funds.
Nutmeg Verdict
Nutmeg are the biggest robo-advisor investment platform in the UK, and for good reason, as their platform is simple to use and has a transparent pricing structure. If you are looking to be more hands-off with your investments, then it is definitely worth investigating further.
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