Our bottom line
Nutmeg is a digital wealth manager that wants to debunk the myths around investment. Utilising technology, the company aims to give customers complete transparency and flexibility when it comes to their investments. This means clear and simple pricing structures, four in-built investment styles to choose from, and no exit fees.
Nutmeg deals only with Exchange Traded Funds (ETFs) in order to keep costs down and keep things as flexible as possible for its customers, making it a potential solution for newbie investors.
What kind of solution is Nutmeg?
Nutmeg aims to keep costs down and allow you to have full visibility on your investments. It is simplicity at its best, with four investment styles to choose from and a clear fee structure attached to each.
All you need to do is decide how much to invest and at what risk level. Meanwhile, if you change your mind, the lack of exit fees makes it easy to transfer your investments or withdraw at any time.
Remember, if you’re ever unsure about the suitability of an investment for your own circumstances, please seek independent financial advice first.
Nutmeg’s top features
One of Nutmeg’s top features would have to be its clear and simple investment styles. These pre-packaged portfolios make it easy to set up an account. You can choose from Fully Managed, Smart Alpha portfolios (powered by J.P. Morgan Asset Management), Socially Responsible and Fixed Allocation.
How much you will pay in fees is tied to which investment style you choose, with the Socially Responsible portfolio proving to be a bit more expensive and the fixed allocation (where it is set up to perform with minimal intervention) being the cheapest option.
Another top feature is no exit fees. That’s right, no fees for moving or withdrawing your money. The lack of these means that you can be flexible with your investments and it won’t cost you a thing.
The wealth manager has also harnessed the power of technology for investment purposes. So not only can you view your portfolio online, but the platform will also automatically reinvest your dividends and rebalance your portfolios when needed.
How do the fees work?
Nutmeg’s fees depend on which investment style you choose.
For the Fully Managed and Smart Alpha portfolios, expect to pay 0.75% up to £100k and 0.35% beyond. These also have an average investment fund cost of 0.19% and an average market spread fee of 0.07%.
The most expensive option is the Socially Responsible portfolio, as the average investment fund cost increases to 0.31%. Otherwise it is 0.75% up to £100k and 0.35% beyond, plus an average market spread cost of 0.07%.
If you are looking to keep costs low, then the Fixed Allocation portfolio has a fee of 0.45% up to £100k, 0.25% beyond. Plus the average investment cost drops to 0.17%, but the average market spread fee remains at 0.07%. However, the lower cost is the result of this type of portfolio being reviewed only once a year.
The good news is that there are no set-up, transaction, trading or exit fees to keep track of. Fees are charged on a monthly basis at the annual rates.
Your Nutmeg account is actively managed by an in-house investment team (with the exception of the Fixed Allocation portfolio). But the digital solution also uses technology to provide you with an intelligent investment platform. As mentioned, the platform will automatically reinvest your dividends and rebalance your portfolio for you based on your risk tolerance and investment style.
If you want to ‘test before you buy’, then Nutmeg offers the opportunity to view a free and complete preview of the type of portfolio that they can build and manage for you.
Once you are set up, then the online platform and corresponding app makes it easy to view updates and movements with your investments. You are able to see exactly where your money is invested and how it is performing.
What are the risks?
While Nutmeg aims to keep costs as low as possible, obviously you will be paying a fee for its services. You could find other solutions where you could select and maintain your own mix of ETFs, but by paying the fee you hand over those decisions to someone else.
The risk therefore is that there are no guaranteed returns. So you could lose money on your investments while also having to pay a fee.
What Nutmeg does have going for it is the lack of exit fees. Which means that if you feel it is all too risky, you can easily extract yourself.
How accessible is Nutmeg?
Setting up an account with Nutmeg is super simple. You can do it online in 10 minutes, and for its general investment services you just need a deposit of £500 (Lifetime ISAs and Junior ISAs are available from just £100).
All you need to do is say how much you would like to invest and what risk level you are comfortable with. But if at any point you want to change this, you can do so without penalties.
All the accounts are actively managed and suitable for newbie investors.
Service and support
Nutmeg offers telephone, email and live webchat support. It also has a large range of FAQs on its site, as well as guides for new investors and financial planning tools.
Is Nutmeg right for you?
If you are interested in investing but don’t want the hassle of actively managing your own portfolio then Nutmeg could be a good choice. The ability to pick from four investment styles, in addition to being able to make changes without penalty, makes it relatively straightforward to get started with investing.
Its fees are clear and transparent. And as they are worked out as an annual cost, there is no danger of losing track of what is charged and when. Overall, Nutmeg offers a straightforward investing solution where customers can be confident they can access their money at any point and know where it has been invested.
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