If you’ve been following Project Financially Free for a while now, both the names Nutmeg and Moneyfarm will likely appear familiar to you. They are two of the most popular and most flexible investment platforms in the here and now.
However, there is still plenty to pick between Nutmeg vs Moneyfarm, which is why I’ve set up a quick head-to-head to help you choose the right service for you.
If you’re in the market for ready-made portfolios rather than a general investment account that relies on prior trading knowledge, both of these apps should appeal to you. However, it’s always worth us drilling down into the nitty-gritty. Let’s take a look at both of the services in a bit more detail.
Summary
Moneyfarm
Moneyfarm is the better option, in our humble opinion. It just barely edges past due to its lower fee structure and good investment performance.
While they offer fewer investment options, I believe the simplified menu is sufficient for most people.
Pros
Cons
Nutmeg Summary
Nutmeg is a well-respected service that has a good combination of product and service. It is the largest digital wealth manager in the UK for a reason. Nutmeg provides a wider product offering and also offers enhanced financial planning services (for a fee).
Pros
Cons
Let’s Start
Comparing investment services is a never an easy task as there are many parameters to consider. Let’s get started.
What is Nutmeg?
Nutmeg is a leading ‘robo investor’ or ready-made portfolio provider. Its main focus lies in offering portfolios consisting of ETFs to investors at a competitive rate. However, there’s also plenty to Nutmeg to appeal to seasoned traders, too.
That said, if you prefer your savings accounts and wealth manager services to offer a little more scope for DIY investing, it might not always be the best fit for you. You may instead want to check out Freetrade or InvestEngine. For more details, please refer to our Freetrade review and InvestEngine review.
Nutmeg offers a range of popular products and services, and considers itself to be the largest wealth management service of its kind. Having been in the game since 2011, it’s had longer than most to protect its standards.
Currently Nutmeg claims to have over £4.5 billion in assets under management and over 200k clients.
What is Moneyfarm?
Moneyfarm is a similar investment platform which, with a similar amount of experience as Nutmeg, has a firm place within money management in the UK. They started operations in 2012, but launched in the UK only in 2016.
Having moved away from solely DIY trading to ready-made portfolios in 2016, the service now offers a range of products and services which are backed with expert advice and guidance. Currently Moneyfarm has over £3.5 billion in assets under management (AUM) and over 125,000 accounts.
Much like Nutmeg, Moneyfarm’s focus on robo-investing and ready-made portfolios will appeal to anyone looking for a hands-off approach.
Nutmeg vs Moneyfarm: Products Available
So – which products can you actually invest in through Nutmeg or Moneyfarm? It’s worth looking in a bit more detail as to what you can actually do with these fund platforms.
Nutmeg Account Types
Nutmeg, offers lifetime ISAs, pension pots, stocks and shares ISAs, general investment accounts and Junior ISAs. On the whole, you can expect to start investing from as little as £500, though you can get started with a Lifetime or Junior ISA from £100.
Moneyfarm Account Types
Moneyfarm offers general investment accounts, stocks and shares ISAs, JISAs, and pension accounts. You are going to need to invest at least £500 in any of these choices to get started.
Therefore, from the off, it is clear that Nutmeg requires a lower threshold of £100 to start with for Lifetime ISAs. However their thresholds for other account types is the same as Moneyfarm’s £500.
Nutmeg vs Moneyfarm: Portfolio Options
Of course, products are just the beginning. Both Nutmeg and Moneyfarm have different types of portfolios available to you depending on your preferences. While both services offer a different slant on how to set up a ready-made portfolio, both standards should appeal to a wide array of people, new investors included.
Nutmeg Portfolio Options
Firstly, let’s focus on Nutmeg. With Nutmeg you have a choice of four standard types of portfolios to pick from. These are fixed allocation, fully managed, Smart Alpha, and socially responsible. The fully managed option will give you a choice of ten levels based on risk, with some flexibility.
Fixed allocation portfolios come in one of five risk levels. While socially responsible options will only invest your money in ethical resources and assets. Fully managed portfolio bring in a layer of human involvement and judgement to overlay on top of algorithmic investing. The fully managed and socially responsible portfolios have ten risk levels to choose from.
If you’d like to dig a little deeper into the science behind investing, you can even choose a Smart Alpha portfolio that’s backed by J.P. Morgan Asset Management. These portfolios contain globally diverse ETFs, some of which are active, and the others are passive. There are five risk levels through this service.
Note that in all cases, a higher number indicates a higher risk level, which effectively means a greater allocation to equities, i.e. stocks, and a lower allocation to bonds.
Moneyfarm Portfolio Options
Moneyfarm operates a little differently in this regard, choosing to offer you a portfolio based on your attitude to risk. The service ascertains which portfolio management system is likely to work best for you on the back of a short questionnaire. However, to be able to get a closer look at the options available, you will need to register and complete the introductory process.
Linke Nutmeg, Moneyfarm’s portfolios consist of 3rd party underlying funds. They provide two tiers of service built with these funds:
- Fixed Allocation: The fund allocation amongst the various asset classes (stocks, bonds, cash, etc.) is set at the beginning of each year and then remains fixed until the next rebalancing period. This rebalancing is done once per year. This makes it very similar to Nutmeg’s Fixed allocation funds or Vanguard’s Lifestrategy funds. Barring exceptional circumstances, Moneyfarm does not adjust or rebalance over the course of the year.
- Actively Managed: Actively managed portfolios allow you to take advantage of Moneyfarm’s portfolio experts. The name is slightly misleading as the underlying funds are still index trackers, however Moneyfarm’s portfolio managers introduce their own secret sauce to actively allocate assets amongst the chosen asset classes. The portfolios are rebalanced more frequently based on their manger’s outlook on current events.
As you may imagine, the fixed allocation approach requires less work on behalf of Moneyfarm’s staff. Moneyfarm therefore passes this benefit on to their customers in the form of lower fees.
Moneyfarm vs Nutmeg: Fees
Of course – before you even start to look at the wide range of investments available to you, you’re going to need to think carefully about fees and costs. Let’s, again, break down Nutmeg vs Moneyfarm in this respect.
Nutmeg vs Moneyfarm: Which is the cheapest platform?
It’s clear that under most circumstances, Moneyfarm is the cheaper option. At smaller portfolio sizes, both charge the same. We take a detailed look at each platform’s fee structure in greater detail below.
Get 6 Months of No Fees with Nutmeg
Open an account with Nutmeg using the link below and you will benefit from no management fees for the first 6 months!
Remember – if you wish to examine the fees for your specific situation, both platforms have fee calculators on their sites so you can figure out exactly what the fees will be.
Click here for Moneyfarm fee calculator or here for Nutmeg fee calculator.
Nutmeg Fees
Like all major service providers that use 3rd party funds, Nutmeg has two levels of fees. The Platform fees are the charges that are explicitly charged by Nutmeg.
Then there are the embedded underlying fund fees and spread costs. These fees are charged by the 3rd party fund and ETF providers. The spread cost is simply the cost of transacting on the financial markets.
Nutmeg’s platform fees are based on which portfolio type you decide to go with. The platform fees are based on your investment portfolio size, as discussed below.
Fixed Allocation
There are two tiers of pricing for the fixed allocation portfolios:
- Up to £100k: 0.45% annually
- Portion beyond £100k: 0.25% annually
With regards to pricing, if you had £130,000 invested with Nutmeg, they would charge you 0.45% on the first £100k and 0.25% on the additional £30k. This means you would pay a total of £450 + £75 = £525 in fees annually.
All Others
If you invest in Nutmeg’s managed portfolios, socially managed portfolios, or Smart Alpha portfolios, the fees are somewhat higher than above:
- Up to £100k: 0.75% annually
- Portion beyond £100k: 0.35% annually
If you invest £130k here, your total fee would be £750 + £105 = £855.
Moneyfarm Fees
Providing you invest at least £500, MoneyFarm will offer you a sliding scale of fees that is refreshingly easy to understand.
After simplifying their pricing system, it’s clear that Moneyfarm has gotten cheaper to invest with over the years. As with most investment service providers, you will have to be aware that you will be paying for two sets of fees – the Platform Fees, which is what we mainly focus on here, and other embedded fees from 3rd parties.
Fixed Allocation
Moneyfarm offers a low pricing tier for accounts if you choose to go with their fixed allocation portfolios. The fees are set up in the following manner:
- £500 – £99,999: 0.45%
- £100,000 – £249,999: 0.35%
- £250,000 – £499,999: 0.30%
- £500k+ : 0.25%
Continuing with the £130k example discussed above, Moneyfarm would use the 0.35% pricing level on the entire amount and charge you only £455 annually.
Here’s a comparison of Moneyfarm vs Nutmeg fees for fixed allocation portfolios based on portfolio size.
| Portfolio Size | Cheaper Option |
|---|---|
| Less than £100k | Both are the same (0.45%) |
| £100k-399k | Moneyfarm |
| £400k-500k | Nutmeg |
| £500k+ | Moneyfarm |
As is clear from the table above, the only specific case when Nutmeg is cheaper is when you have between £400k and £500k with them. Outside of that range, Moneyfarm is the same or cheaper.
Actively Managed
There are seven tiers of pricing that apply to the entirety of a portfolio, based on asset value within. Here’s a quick breakdown of what you can expect:
- £500 – £9,999: 0.75%
- £10,000 – £19,999: 0.70%
- £20,000 – £49,999: 0.65%
- £50,000 – £99,999: 0.60%
- £100,000 – £249,999: 0.45%
- £250,000 – £499,999: 0.40%
- £500,000+: 0.35%
This pricing structure effectively means you can expect to pay a lower annual rate the more you choose to invest. Therefore, this sliding scale clearly benefits those who have more to save.
Based on this pricing structure, if you had £130k to invest, you would pay Moneyfarm £585. This is significantly lower than what Nutmeg charges. Moneyfarm has a helpful pricing calculator that can help you accurately determine how much you will pay.
What’s clear is that for Actively Managed portfolios, if you have £10k or more to invest, Moneyfarm will always be the cheaper option. Below that level Nutmeg and Moneyfarm cost the same.
Underlying Fund Fees & Spread Costs
Finally, it’s important to call out the additional embedded costs with nearly all providers. The total of platform fees and these additional costs will show you the total amount that you are paying to have your money managed for you.
Typical underlying fund fees are in the average range of 0.2% and market spread costs might be roughly to 0.05% to 0.10% on your portfolio.
The image below shows the full cost of investing using an actively managed portfolio with Moneyfarm as an example.
Nutmeg vs Moneyfarm: Advice & Learning Resources
Both Nutmeg and Moneyfarm are committed to helping new users learn about how to make the most of their money. Just one look at their websites will tell you that they both have stacks of guides and options for you to read up and research how everything is likely to work.
Nutmeg, for example, offers calculators for all their services. Moneyfarm offers a pension calculator, too, with access to a variety of eBooks and resources if you’d like to take reading to a new level.
What Nutmeg also offers is a tailored financial advice service, which is a recent addition, and which allows you to get intensive planning and finance support for £575 per year before VAT. If you are mortgaging or looking for extra help alongside a robo-investment service, this might be worth looking into.
Moneyfarm offers regulated advice through all its services, meaning that some users may argue they are actually a bit more hands-on by default compared to other investment platforms.
Safety
Is My Money Safe with Nutmeg?
Yes. As with all good investment services, Nutmeg is FSCS protected. This means that, should either company fold, you will receive protection on money you have invested up to £85,000.
Is My Money Safe with Moneyfarm?
Yes, just like Nutmeg, your money is safe with Moneyfarm as it is FSCS protected up to £85,000.
Nutmeg vs Moneyfarm: Past Performance Record
Before we wrap up who really wins in the battle between Nutmeg and Moneyfarm, let’s consider how both of the platforms have performed over the past few years. This is always worth considering before you put any money down.
My quick synopsis is that over a long period of time, say exceeding 5 years, both companies are likely to deliver similar performance.
If you’d like to dig into the details, please keep reading here. Otherwise feel free to skip to the next section below.
As you may imagine, it’s very difficult to compare like for like across both platforms as they have different portfolio options and risk models. While they both do use Asset Risk Consultants’ benchmark portfolios, it is difficult to line the comparable portfolios up here as the definitions vary widely.
For the purposes of this comparison I’ve taken the medium-high risk tolerance level, meaning a benchmark portfolio would have approximately 80% allocation to equities and 20% to bonds.
I selected two Nutmeg portfolios here as Moneyfarm’s Risk Level 7 falls between the two as far as allocation to bonds is concerned. Moneyfarm Risk Level 7 has 15% allocation to bonds whereas Nutmeg’s Risk Level 8 has 20% allocation to bonds whereas Level 9 has 10% allocation to bonds.
Some investors, say someone in their 60s or over, may prefer less aggressive allocation. If this fits you, then your target risk level would be lower with perhaps a 60% allocation to equities and 40% to bonds, or what’s known as a balanced portfolio. In that case, please choose portfolios with lower risk levels than discussed below.
Let’s look at the data for the last 3 calendar years for which there is full data available for both funds. We are also looking at the actively managed funds in both cases.
The table below also shows the data for the last 12 months, but the data is not perfectly comparable as Moneyfarm’s data is one month old.
| Year | Nutmeg Risk Level 8 | Nutmeg Risk Level 9 | Moneyfarm Risk Level 7 |
|---|---|---|---|
| Last 12M | 4.2% (Aug-Jul 30) | 5.8% (Aug-Jul 30) | 1.8% (Jul-Jun 30) |
| 2022 | -11% | -10.5% | -5.1% |
| 2021 | 15.4% | 18.1% | 12.1% |
| 2020 | 6.4% | 7% | 7% |
| 3Y CAGR (2020-22) | 3.0% | 4.2% | 4.4% |
The table shows that on a compounded basis over the last 3 calendar years (Jan 1 2020 to Dec 31 2022), Moneyfarm comes out ahead. However when you factor in the data for 2023, it’s clear that Nutmeg’s portfolios outperformed; but again to note that this bounce back comes after a horrid 2022. Does it wash out overall? We’ll have to see. We will update this article once the December 2023 data is in so we can get a fuller picture and we’re not left guessing.
What does this mean? I would say that both companies are roughly comparable on performance. There will be periods of time during which one or the other is ahead, but when looking over a period exceeding 5 years, it’s likely that both will be roughly similar in performance.
Nutmeg vs Moneyfarm: Verdict?
Both Moneyfarm and Nutmeg have lots going for them. They’re both highly secure, as they’re backed by the Financial Conduct Authority and the FSCS.
It’s worth remembering that it may work out cheaper to invest in Moneyfarm. Moneyfarm also seems to be the more conservative choice to manage your investment experience with.
That said, Nutmeg appears to be a leader in many other respects. It offers more robo advisor expertise, more products, and a cheaper buy-in. What’s more, Nutmeg also offers you more in the way of portfolio options. The addition of an optional paid financial advice service really tops things off.
Since we have to pick a winner here, we’re going with Moneyfarm! Moneyfarm wins the day, but just barely so. At the end of the day, they are cheaper and come out similar in performance (if not slightly ahead). Overall, I prefer the simpler service offerings that are designed to make my life easier, so I don’t need the overwhelming choice provided by Nutmeg.
Moneyfarm
If you are looking for a service with the lower fees and good performance, then Moneyfarm is the best option.
But in the same breath I must say Nutmeg is no slouch either. At lower portfolio levels, the costs are roughly the same as Moneyfarm and probably negligible in difference. The performance will be decent too with both. There’s a reason they’re the largest digital investment service in the country!
Of course, everyone’s experiences may vary. Ultimately the decision may come down to how much you are looking to invest up front and which product you are interested in.
Nutmeg
If you are looking for a few more investment options and want the larger investment service, then Nutmeg is the best option.
Before You Go…
I hope you’ve found my rundown on Moneyfarm vs Nutmeg useful!
Whether you’re aiming for Coast FIRE or just trying to save £500 a month and just need some financial or investment advice from a top service, there are numerous options out there.
If you’re perusing the wider app scene and want to know my thoughts on other round ups, take a look at what I have to say about the other services on offer in the UK:
Do leave us a comment or send a note if you have any questions or comments!
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