Nutmeg is a digital wealth manager and robo-advisor which was launched in the United Kingdom in 2011. It helps its users invest in stocks and bonds and create their own portfolio, and is a low-cost platform suitable for both un-initiated investors, as well as people who are experienced in the financial markets and want to use its technology to help save for retirement. In terms of building investors’ portfolios, Nutmeg focuses on tracker funds and ETFs, and also allows its users to manage their investment, according to their own risk profile.
This review will take you through everything you need to know about Nutmeg in order to decide if its the right platform to use to help you invest your money.
Pros & Cons
What can I do with Nutmeg?
Nutmeg provides an ideal way for individuals to make investments and save for the future with the help of its automated software. Because it caters to individuals with different tastes and preferences, Nutmeg provides a range of different account options. The services offered by the platform are explained in more detail below, as are the different accounts you can select from.
Nutmeg lets new clients pick goals from a list when they set up their account. A resource section also provides pension and ISA account calculators. It offers some great advice and guidance on the required asset levels needed to achieve retirement or financial goals.
The portfolio allocation which Nutmeg provides produces a detailed graph for users to easily assess the strength and performance of their portfolio. It consists of hypothetical returns for the investment horizon, and users can tweak values to achieve their goals. Clients holding fully managed and socially conscious accounts have the opportunity to speak with financial advisors as per their preference, however once accounts are established at the automated level, no coaching or guidance is available.
When using Nutmeg, users can open a portfolio in just about 10 minutes. The Portfolios are divided into seven categories based on asset allocation. They are:
- Global Equities
- Corporate bonds
- Developed government bonds
- Emerging market equities
- Emerging market government bonds
- Developed Equities
Nutmeg also offers a stocks and shares ISA. This is a simple, low-cost invest method which is tailored to the user’s personal risk profile. It is fully managed by a team of professional investors. Users also get access to a Lifetime ISA, a Junior ISA and a Nutmeg pension product. These are all explained more thoroughly below.
Basically, Nutmeg offers a wide variety of investment options to suit anyone’s preferences in terms of both risk and how hands-on they want to be in the managing of their portfolio.
You might want to use Nutmeg if:
- You want a low-cost solution to invest in stock market but don’t have the expertise or time to make your own investment choices
- You want to take a medium level of investment risk but realise the importance of controlling costs
- You’re saving up for your first home
- You want to save money for your retirement
Your different account options
Nutmeg offers a total of five different account options: general investment, stocks and shares ISA, junior ISA, lifetime ISA, and personal pension.
This is a standard taxable investment account which is flexible, and easy for investments not held in pensions of ISAs. This account option does not require any setting up or exit fees. The minimum investment is £500 and there are no limitations on maximum investment. It is designed for users who want to invest over 3 years or more.
Stocks and Shares ISA
This is an excellent option for those users who are new to trading and do not have the knowledge or the skill required to construct a DIY portfolio. This type of investment account provides tax free returns and does not charge users with a setup or exit fees. Users can transfer their existing stocks and share ISAs to Nutmeg’s platform, and a stocks and shares ISA with Nutmeg requires a minimum investment of £500.
This option allows people to start investing for their children and take advantage of the annual £9000 allowance to save for their child’s future. Any parent or guardian can set up a Junior ISA with Nutmeg, where the owner of the assets will be the user’s child aged under 16 years old. They can access the money when they reach adulthood at 18. The minimum investment for this account is £100.
Lifetime ISAs or LISAs are a relatively new type of ISA which assist individuals to save for their retirement, or for buying a new home. An individual applying for a Lifetime ISA will receive a bonus if 25% of what they invest, from the UK government. This is subject to a set limit on each tax year.
The maximum amount one can put into a Lifetime ISA in one tax year is £4,000, and the 25% bonus is received in the form of monthly payments.
Lifetime ISAs can be used to buy a home or can be withdrawn in retirement. There are certain restrictions that one needs to keep in mind:
- Using Lifetime ISAs for purchasing a home is only applicable for first-time buyers. It is not applicable for those who already have a home or have owned one in the past.
- One can only withdraw money for buying a home, or upon turning 60 (otherwise fees have to be paid when withdrawing funds).
- The value of the home should not be more than £450,000.
- The scheme is only applicable for the home the individual will reside in. The home should not be used as a holiday home or for renting purposes.
- Individuals must use a traditional repayment mortgage plan to procure the house.
A pension plan is a great way for individuals to invest for their retirement in a tax-efficient way. A £100 contribution into the pension can effectively turn into £125 or more in case one is a high tax payer, and can grow over time to leave you money for your retirement. Nutmeg provides an easier and low cost alternative to the traditional way of setting up a pension.
Until very recently, Nutmeg allowed pension users to invest only in managed portfolios. Now, one can access fixed allocation portfolios directly via a pension account. Nutmeg invests in ETFs which are cheaper than actively traded funds and keeps the costs low while aiming to deliver good returns for account holders.
Any individual over the age of 55 can take out money from their pension savings accrued through the platform, but it is worth bearing in mind that Nutmeg sets up the portfolio in a way to achieve goals based on the chosen pension age while signing up. Nutmeg allows pension holders to change this age at any given point.
Pension holders have a couple of options on what to do with the money when they retire. They can either use it to purchase an annuity, use the money to live comfortably in retirement, or enter income drawdown by keeping their pot invested. The latter option will allow them to make regular agreed withdrawals, while staying invested in the stock market.
How does Nutmeg work?
Like any other robo-advisor platform, Nutmeg implements technology to assess what stocks and financial products to invest each user’s money into, according to the user’s preferred risk level. It does its best to ensure that your portfolio will produce gains over time by carefully analysing the market and the investments in your portfolio (as long as you have selected a managed portfolio).
Nutmeg offers four main services to its users. These are managed portfolios, fixed allocation portfolios, socially responsible portfolios, and personal financial advice.
- Managed portfolios. These allow users to choose from ten investment portfolios provided by Nutmeg according to their risk profile. The portfolio is managed constantly, with stocks and shares being bought and sold as the market moves. For investors who prefer investing ethically, Nutmeg additionally offers 10 fully managed socially responsible investment portfolios.
- Fixed allocation portfolios. These are a cheaper alternative to the fully managed portfolios, and involve choosing an investment portfolio which doesn’t change over time. The stocks and investment products in a fixed allocation portfolio are decided according to your risk profile, and are typically made up of a variety of ETFs. Fixed allocation portfolios are ideal for those investors who want to access a cheap, multi asset tracking portfolio. They involve minimal additional costs for the benefit of Nutmeg’s investment team managing it. Users can choose from a total of 5 set portfolios, consisting of risk levels such as cautious, steady, growth, balanced and adventurous.
- Socially responsible portfolios: Socially responsible portfolios are weighted towards specific companies that have committed towards social responsibility, and Nutmeg offers users 10 options to choose from. These portfolios range from cautious to aggressive risk profiles. The platform regularly reviews the portfolio investment to make sure that the user’s money is balanced between ethics and performance.
- Personal financial advice: Nutmeg’s personal financial advice service was introduced in November 2018. It functions as a low-cost personalised advice and planning service, where users can either elect to receive a personalised advice or planning service or receive general support or guidance. Nutmeg’s in-house support team provides general and support and guidance. They can help users understand their investments in detail including specifying risk levels. This service costs £575 plus VAT.
How easy is it to use Nutmeg?
Nutmeg’s website and app are very simple to understand and use, and this extends to the very quick signing up process. Users are asked about their preferred account type, followed by questions to determine their risk profile. They are also required to enter their starting amount as well as how much they would want to contribute monthly. Before creating the account, Nutmeg provides a rough projection of how much the user’s portfolio is worth.
Users can keep up-to-date with their portfolio’s performance easily through the charts and graphs displayed by Nutmeg to track performance. The ease with which users can withdraw money or change their investments will depend on the type of plan they have signed up for, and the customer support team is available for any more complex queries.
What fees are charged by Nutmeg?
The fees charged will depend on the amount of the user’s overall investment. They have decreased their fees by a large degree since 2017 to competitive rates. Nutmeg sometimes provides an exclusive offer where they do not charge any platform fee for the first year. Here’s a summary of the fees you can expect:
|Invested Amount||Nutmeg Fixed Allocation portfolio fees||Nutmeg managed & Socially responsible portfolio fees|
|£500,001 and above||0.25%||0.35%|
These fees cover the user’s trading costs. All chargeable fees are deducted directly from the user’s Nutmeg account monthly. This is calculated based on annual rates. Even though they do not charge any exit or setup fees. A £20 fee is applicable if a user requires a transfer out. The average fund cost is 0.21% per annum.
There are some additional costs of investing involved, usually when carrying out an ‘in specie’ transfer. The average investment fund costs paid to fund providers is 0.17% for fixed allocation, 0.19% for fully managed and 0.31% for socially responsible investments.
Are there minimum and maximum investment limits?
The minimum investment amount for the stocks and shares ISA, general investment account and personal pension account is £500, while the minimum investment amount for opening a Nutmeg Lifetime ISA and Junior ISA is £100. There are no limits on maximum deposits.
Can I withdraw or deposit money at any time?
Nutmeg users can withdraw from their ISAs as they wish without incurring any extra charges, and deposit at any time so long as they haven’t already reached the annual depositing limit. It typically takes 3-7 business days but can sometimes take longer due to some circumstances. Nutmeg updates each user’s investments on a twice weekly investment cycle. This happens typically on a Monday or Thursday. If a trade gets sold, it takes 2 business days to settle before Nutmeg receives the cash and sends it back to the user. Once settled, the amount is sent by them to the user’s nominated bank account via electronic transfer, which typically arrives the following business day.
However, the platform recommends their users enter withdrawal requests quite earlier on because it can take time to receive the proceeds of a withdrawal. In case of ‘in specie’ transfers, Nutmeg charges £20 per stock. This when the user requests the platform to transfer their investments to another provider, instead of selling them and sending the amount as cash. Nutmeg follows HMRC guidelines which prescribe that the process should not exceed 30 calendar days.
Is Nutmeg regulated?
Nutmeg is covered under the Financial Services Compensation Scheme and is regulated by the Financial Conduct Authority of the UK. This means that a user is entitled to receive £85,000 of their money back in case Nutmeg goes bankrupt.
Is Nutmeg secure?
Yes, Nutmeg is secure both in terms of the holding of your funds and assets and in terms of having good account security. Nutmeg keeps their user’s funds secure in a separate account for added security. This ensures that they will never lend these funds to third parties. Nutmeg’s custodian bank State Street manages the separate account. Each user’s personal data is protected by TLS encryption, and Nutmeg also provides two-step verification during logins.
How can I access Nutmeg?
Nutmeg allows its users to access their respective accounts easily through a web browser or the official app, on a 24/7 basis. Nutmeg does not offer a desktop or mobile trading platform, as it does not allow self-directed investment, but Nutmeg’s website is an easily-navigable one, where major features, disclosures and services are highlighted.
Nutmeg’s mobile app is compatible with both iOS and Android and can be found on their respective app stores. However, it contains fewer functions than the site offers. Users can easily view their performance, make deposits and withdrawals directly from the app. They can also correspond with their investment manager if this is something they have signed up for.
Nutmeg is available only for citizens of the UK. However, Non-UK residents who are British passport holders and possess a UK bank account can open an account with them. More details are given in the FAQ page of the official website.
Nutmeg’s customer support team is available from Monday through Friday. Their small, dedicated customer support team based out of London operates between 9:00am and 5:30pm. The official website also has a live chat function also operating under that time schedule.
Additionally, Nutmeg offers one-on-one interactions with professional advisors. Users must book an appointment by calling the number mentioned on top of their official website to access this service.
Nutmeg’s extra features
In addition to its robo-advisor services, Nutmeg offers its customers access to a range of useful materials. Most notably users benefit from:
- Educational Content: Nutmeg provides free educational content in the form of a blog, some tools, and other educational resources. A variety of topics is covered by the blog in addition to the analysing current market headlines.
- Research: When it comes to research, Nutmeg provides limited content. There is a blog called Nutmegonomics which consists of articles explaining the world of finance and investing. A monthly article called Nutmeg Investor update is also published.
In conclusion, Nutmeg is an excellent option for users looking for a low-cost stock market investment service. It is one of the cheapest services which offers users the ability to let professionals and technology manage their portfolio and take tactical decisions on their behalf. They are an ideal robo-advisor for easily accessing Lifetime ISAs, Stocks and Shares ISAs or pensions, with a solid track record of competitive returns in the past.
Their fee structure is reasonable, and they offer users a variety of different accounts to ensure you can get what you’re looking for. One option that many customers find attractive is Nutmeg’s ‘Socially Responsible Portfolio’ option, which helps people invest their money ethically.
How to open an account with Nutmeg
Nutmeg’s account opening process is simple, smooth, and well-constructed. The steps are as follows.
- First you must specify the reason you’re saving for by picking any one of the two options. These are “I Have a goal” or “Just invest”.
- Next, you have to specify how long you want to invest your money for. Specifying the time span is important to let Nutmeg know how much risk you’re willing to take to reach your goals.
- In the next step, you will be asked to enter the total amount of funds you would want to invest.
- After entering the amount, you can choose from three separate investment styles: Fixed allocation, fully managed and socially responsible.
- Nutmeg will then ask you a series of questions to determine how they’ll invest your portfolio. Based on your answers, Nutmeg will allocate a risk profile for your investments.
- Nutmeg provides five risk sensitive increments. You can pick any one of them. Your decision will ultimately influence the equity and fixed income mix in Nutmeg’s proposed allocation. You can check the projected returns on the graph they provide.
- Once your account is up and running, the robo-advisor will update your portfolio with the aim of meeting your investment targets over the time specified.