Nutmeg Review: Best Investment Platform?

If you’ve been following PFF recently, you’ll have seen that I’ve been diving deep into investment apps and modern ways for you to make the most of your money.  It seems like there’s no better time than ever to think about doing this.  Therefore, simple platforms like Nutmeg – which are appealing to plenty of people because you can manage stock portfolios and more on the go – are well worth looking into.  That’s why I thought I’d offer you a quick Nutmeg review, and to consider whether or not it is a worthwhile way to invest your money.

I’ve looked at a few of the best investments out there for newbies and pros alike.  Nutmeg, however, is a name which seems to keep popping up.  Is it FSCS protected?  Can you move your pension to the service?  Let’s take a closer look, and find out whether or not it’s worth investing time as well as money in.

How Does Nutmeg Work?

Nutmeg is a simple investment management service which has been around for nearly a decade.  It’s appealing to many people because it’s low on the cost side of things, and you can set up a portfolio based on your own individual risk level.  It’s one of what many people are calling ‘robo investors’.  That, to me and you, means it actively invests your money in assets on your behalf.  That might sound scary, but it could actually be pretty efficient. 

You can take advantage of up to ten different financial profiles, which you can tune based on how much risk you’re likely to take.  Then, Nutmeg will set up a pre-set portfolio system for you which it thinks will be ideal for investing your money.

You can choose to have their team completely manage your portfolio, or you can opt for the automated approach.  This lets you set parameters so their system knows what you are likely to want to buy into.  There are also options for socially responsible investing, too.

Nutmeg will let you invest in pensions as well as in stocks, which means from the off, there is a nice range of choice available.  What’s appealing about Nutmeg is that they have advisors working behind the scenes keeping an eye on your investments.  From the start, you can set yourself a plan of action that suits your needs the best.  Nutmeg wants to understand your investor profile from the get-go, and this really is all for the better – trust me!

What Investing Options Do They Offer?

Nutmeg offers a variety of different investment options.  They aim to deliver a refreshingly simple service to newbie investors, meaning while other platforms may be a little more diverse, you can at least expect the basics.  That’s no bad thing – especially given the fact that Nutmeg goes into things in a pretty innovative fashion.  It’s not a boring system to say the least.

Nutmeg offers what it calls an intelligent approach to investing.  That is, it goes for a broad, sweeping approach to finding investments instead of narrowing down the field.  They really do base your portfolio investments on that opening profile, so it’s well worth setting up properly.  Otherwise, you’re going to risk getting into a system that just doesn’t work for you.

Nutmeg generally invests in equities and bonds, with ETFs being their central holdings.  You can invest in a junior ISA account, a lifetime ISA service, an ISA with stocks and shares options, a pension pot, and a general service.  Naturally, the investment options you choose are entirely down to you.  It’s nice to see a modern robo-investor service going full on into pension management.  It’s rarer than you think.

Breaking this down even further are the three main types or levels of portfolio management.  You can decide how you’d like Nutmeg to manage your money based on three key models.  These are Fixed Allocation, Fully Managed and Socially Responsible.

This all might sound a bit gobbledegook to newbie investors, so let’s have a go at breaking things down even further.

What’s the Difference Between Fixed Allocation, Fully Managed and Socially Responsible Portfolios?

Naturally, it’s a pretty good idea to take a look at what makes each of these options tick.  One will offer you completely automated investing, another gives you more control, and another places emphasis on investments on that incorporates ESG considerations. 

Nutmeg has launched a new portfolio option called “thematic investing”, which is available at the higest risk tier (i.e. Risk Level 5 and higher).

Here’s a little more detail – it wouldn’t be a worthwhile Nutmeg review if I didn’t drill down deep into the facts.

• A Fixed Allocation Portfolio runs autonomously based on the profile and risk level you set when you start signing up.  There are five levels, rather than the ten advised at the start of this review, through this service.  This tends to be the most affordable out of the management options.  However, it doesn’t receive any kind of regular oversight beyond yearly checks.
• A Fully Managed Portfolio is, as its name suggests, managed by real life people.  This means that Nutmeg staff will regularly check in on your investments.  However, there’s still a nice amount of autonomy.  They will make decisions on your behalf.  This option gives you a bit more in the way of control, but there’s still a hands-off approach which is quite appealing.  You’ll have access to the full ten levels here, too.
• The Socially Managed Portfolio runs similar to the Fully Managed option in that you still receive staff management on your behalf.  However, not only will they invest your money based on your financial and risk profiles, but also incorporate ESG considerations to your investments.  If you care about investing in businesses and assets which are socially responsible, as the name suggests, this is likely to be your best option.
• Thematic Investing: This is a strategy which allows investors to focus on specific themes, such as technological innovation, resource transition, or evolvving consumer. While their experts take care of selecting the specific stocks within these themes, you have the flexibility to choose which of the themes you would like to be on. As always, betting on specific themes requires a higher level of knowledge and I wouldn’t recommend it unless you really know how each industry/theme is going to evolve over time.

What is Nutmeg Fixed Allocation?

As the name suggests, in a fixed allocation portfolio, the allocation to equities and bonds are fixed from the start by Nutmeg’s investment team and then remain relatively fixed through the year. The holdings are actively rebalanced as the proportions move due to market movements, but no other changes are made.

Once each year, the investment team makes any changes they feel necessary and then again the same process is repeated.

Nutmeg has tiered their offering by risk level, or in other words, by levels of expected volatility. The table below shows how this breaks down:

Risk Level	Equity Allocation	Bond Allocation	Total UK Allocation
1	20%	80%	60%
2	40%	60%	50%
3	60%	40%	43%
4	80%	20%	30%
5	100%	0%	20%

The lowest risk level has the highest allocation to bonds, as would be expected. Similarly it also has the highest overall allocation to UK securities. It’s clear here that the goal is to avoid portfolio volatility due to both market movements and also currency swings. Aside from a nasty 2022 during which bonds really were hammered, the Risk Level 1 portfolio should achieve what its aiming for.

As you step up the risk levels, the allocation is shifted in favour of equities in 20 percentage point steps. Similarly we see allocation to UK securities going down in favour of global securities – particularly the US.

The combined impact is that the level of portfolio volatility increases, but so does the overall expected return from the portfolio. I believe this portfolio construction is sensible and over longer periods of time should deliver as per expectation.

What Are Nutmeg’s Fees?

Fees, of course, are an important consideration.  The fees will differ through the service depending on how you manage your portfolio. 

At the basic Fixed Allocation level, you can expect to pay 0.45% annually on anything up to £100,000, with funds beyond that receiving 0.25%.

Fully Managed Portfolios, meanwhile, will need 0.75% from you each year up to £100,000, and 0.35% beyond that.  The Socially Responsible option offers the same rates. The Thematic Investing portflolios come in at a 0.75% fee.

On the whole, some may find these fees to be a little higher than most.  However, you’ll need to consider whether or not the benefits outweigh the costs.  Certainly, it’s one of the easiest systems to use, and the app itself is likely to appeal to average investors as being well worth the money.

It is nice to see that the ethical investing option is on the same level as the Fully Managed option, meaning that if you do want to be more responsible about where your money goes, you’re not facing any penalisation.

You can also open an ISA or transfer in from another provider and get 6 months of no management fees. That’s bound to be a pretty appealing offer from any angle you look at it.

Nutmeg have a straightforward fee calculator on their site which you can use to work out exactly what you will be charged based on your investment amount and portfolio selection.

Is My Money Safe With Nutmeg?

Yes – it’s one of many different investment platforms which offers full FSCS protection.  As it is FSCS protected, you can claim back a maximum of £85,000 should the company go under at any point.  The platform actively stores your money in a third party repository, a custodian bank, which is a very secure move indeed.  This is something to keep in mind.

However, do always remember than any kind of investment carries a risk.  With Nutmeg, you get a good level of protection from the outset, but ultimately, you’re still going to consider each and every payment you make.

How Have Nutmeg’s Portfolios Performed So Far?

Nutmeg’s portfolios, on the whole, have a bit of a varied performance over the years.  Data shows that Nutmeg tends to perform well on a long-term basis rather than in the short-term.  The data available compared to competitors suggests that the majority of their portfolio options seem to work better and comparably so against the competition over eight years, rather than over five.

However, we need to keep in mind that this is only working through averages.  Nutmeg may perform differently for you depending on your risk profile and the way you manage your money.  That being said, it’s worth keeping an eye on precedent data if you’re going for the full robo option.  Otherwise, who you get as a personal staffer is obviously going to vary.

Generally?  The results are positive.  As is the case with the majority of investments, just be prepared to get involved with Nutmeg for the long haul if you want to make any kind of serious return.

Conclusion

So – what does this Nutmeg review tell us?  Whether you want to invest in a personal pension or a host of different ISAs, there’s certainly plenty of choice.  However, do be aware that fees will differ, and all data seems to point towards Nutmeg success being a long haul game.

It’s certainly worth considering, and that 6 months of no management fees aligns it with the best value investment platforms out there.  Do remember that even small investments carry risk.

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