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
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.
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,
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
What Investing Options Do They Offer?
Breaking this down even further are the three main types or levels of portfolio management. You can decide how you’d like
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
Nutmegstaff 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:
|Total UK Allocation|
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.
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.
Sign Up & Get 6 Months of No Fees
You can get 6 months of no management fees when you sign up to
Is My Money Safe With
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’s Portfolios Performed So Far?
However, we need to keep in mind that this is only working through averages.
Generally? The results are positive. As is the case with the majority of investments, just be prepared to get involved with
So – what does this
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.
More on Nutmeg
by Jon Craig
I am the creator of Project Financially Free and I started this journey to both educate myself and share my insights on personal finance. I’m passionate about financial literacy and I invite you to join me on this transformative path. See more.