Our bottom line
Nutmeg is a digital wealth manager who set out to debunk some of the common misconceptions around investments. Utilising technology, they aim to give customers complete transparency and flexibility when dealing with their investments, offering 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 help keep costs down and keep things as flexible as possible for its customers, making it a potential candidate for newbie investors.
What kind of solution is Nutmeg?
Nutmeg aims to keep costs down and provides you full visibility of your investments, providing the simplicity of having just 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 you’re comfortable with. Meanwhile, if you change your mind, the lack of exit fees makes it easy to transfer your investments or withdraw your funds at any time, should the need arise.
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 (powered by J.P. Morgan Asset Management), Socially Responsible and Fixed Allocation portfolios.
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. This means that you will have the flexibility to transfer, or withdraw your funds at a later date without Nutmeg charging you a thing.
Nutmeg 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.
At the time of writing, for the Fully Managed and Smart Alpha portfolios, expect to pay 0.75% on the first £100k invested and 0.35% on the portion beyond. The Fully Managed portfolio has a fund cost of 0.22%, for the Smart Alpha portfolio the fund cost is 0.14%. Both also have a market spread fee of 0.08%.
The most expensive option is the Socially Responsible portfolio, where the fund cost is 0.29%. You’ll also pay 0.75% on the first £100k invested and 0.35% on the portion beyond, plus the market spread fee of 0.08%.
If you are looking to keep costs low, then the Fixed Allocation portfolio charges the lower fee of 0.45% on the first £100k invested and 0.25% on the portion beyond. The fund cost is just 0.19%, plus the market spread fee of 0.08%. The lower fund cost reflects the fact that the mix of investments in the Fixed Allocation portfolio is set by Nutmeg’s investment team at the beginning, rebalanced automatically and 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, and are based on the annual rates.
Your Nutmeg account offers three portfolios that are actively managed by an in-house investment team, while the Fixed Allocation portfolio is reviewed once a year. 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 Nutmeg’s investment team.
One of the risks therefore is that there are no guaranteed returns. So you could lose money on your investments while also having had to pay their fee.
One of the things Nutmeg does have going for it is the lack of exit fees, which means that if you needed to transfer your funds elsewhere, you could easily extract yourself.
How accessible is Nutmeg?
Setting up an account with Nutmeg is super simple. Typically it can be done online in around 10 minutes. For its general investment services you need a deposit of £500, while 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.
Three of the portfolios are actively managed, the other reviewed annually, any of which might be an attractive option 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 a good choice 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, you’re less likely to lose 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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