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 much 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.
Nutmeg vs Moneyfarm: Quick Overview
Not got time to read my whole review of Nutmeg vs Moneyfarm? Don’t worry. Here are the most important points to keep in mind in a nutshell.
- Portfolios: Nutmeg offers fully managed, fixed allocation and socially responsible portfolios. Moneyfarm offers fully managed services only.
- Products: Nutmeg allows you to invest in five different products, while Moneyfarm offers three.
- Advice: Both services allow you to research investing through online tutorials and guides.
- Representive Fees: Nutmeg charges 0.75% management on managed investments up to £100,000, 0.35% thereafter. Moneyfarm has a sliding fee scale. Both services have underlying fund charges.
- Minimum Investments: Nutmeg requires between £100 and £500 minimum investment, while Moneyfarm is £500.
- Apps and Programs: Both services have flexible mobile apps.
- Performance: Difficult to compare like for like although Moneyfarm has performed slightly better over years of market volatility. However, both services are very closely matched.
What is Nutmeg?
Nutmeg is a leading ‘robo investor’ or ready-made portfolio provider. Its main focus lies in offering ETFs and funds to casual traders 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.
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.
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. Moneyfarm has £2.4 billion in assets under management and more than 90,000 clients.
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 is cheaper to start with for Lifetime or Junior ISAs, and offers a few extra account types to Moneyfarm. However, that’s nothing to say Moneyfarm doesn’t have the edge over Nutmeg in other areas.
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 three standard types of portfolios to pick from. These are fully managed, fixed allocation 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. Like the fully managed portfolio, there’s also ten risk levels with the socially responsible portfolios.
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.
While 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: 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. Consequently, Moneyfarm passes this benefit on to their customers in the form of lower fees.
Nutmeg vs Moneyfarm: 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.
If you invest in Nutmeg’s managed portfolios and socially managed portfolios, you can expect to pay an annual fee of 0.75%. This drops to 0.35%, however, when you invest more than £100,000. With a fixed allocation portfolio, this changes to just 0.45% and 0.25% for less and more than £100,000 invested respectively.
So, if you pay £50,000 into Nutmeg’s fully managed portfolios a year over two years, you’d expect to pay around £750 in management costs. This would drop to £700 if you invest £100,000 per year on the same basis.
Providing you invest at least £500, MoneyFarm will offer you a sliding scale of fees that is refreshingly easy to understand.
MoneyFarm has simplified its management pricing structure – which promises to reduce rates slightly for most customers. As with most investment service providers, you will have to be aware that you will be paying for two sets of fees:
- Platform fees: This is what the providers like Moneyfarm, Nutmeg, or Hargreaves Lansdown charge for their services
- Fund fees: This is the fee charged by the underlying funds in the portfolios. This fee varies based on the provider of the fund and whether it is actively managed or a passive index tracker or ETF.
There are now seven main 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: Pay 0.75%
- £10,000 – £19,999: Pay 0.70%
- £20,000 – £49,999: Pay 0.65%
- £50,000 – £99,999: Pay 0.60%
- £100,000 – £249,999: Pay 0.45%
- £250,000 – £499,999: Pay 0.40%
- £500,000+: Pay 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. Moneyfarm has a helpful calculator that can help you accurately determine how much you will pay.
However, do also take into account underlying fund fees (representative 0.2%) and market spread (representative up to 0.09%) on your portfolio. Effectively, these fees all ensure your portfolio remains fully managed, and that you also have access to your own investment consultant.
Fund fees are ‘built’ into the price of running your portfolio, meaning the main cost you will see is the annual rate(s) suggested above.
Moneyfarm offers an even lower 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%
Nutmeg vs Moneyfarm: Which is the cheapest platform?
Depending on what product and portfolio type you invest in either platform could work out cheaper, both platforms have fee calculators on their sites so you can figure out exactly what the fees will be. Check here for Moneyfarm fee calculator or here for Nutmeg fee calculator.
Both services apply varying fund charges, too, which are worth looking into before you invest and are shown on the fee calculators mentioned above.
Get 6 Months Zero Management Fees with Nutmeg
It is worth keeping in mind that you can reduce your fees significantly with Nutmeg by investing in a fixed allocation portfolio and / or take advantage of no management fees for the first six months when you sign up via my link.
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!
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 some investment platforms.
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.
It’s very difficult to compare like for like across both platforms as they have different portfolio options and risk models. However for the purposes of this comparison I’ve taken the middle risk level for both platforms.
Across the past three years, Moneyfarm has only just outperformed Nutmeg, though in 2019, annual figures were as close as 11.6% and 11.1% respectively.
That said, Nutmeg’s will likely serve newbies and seasoned investors well. There is certainly nothing to say that Nutmeg is any worse than Moneyfarm in general performance, given that when volatility works in your favour, you really can expect the best from the service.
Nutmeg vs Moneyfarm: Pros and Cons
Let’s take a look at some pros and cons for both platforms.
Nutmeg Pros and Cons
- Nutmeg lets you get started with one of five different products from as little as £100. That’s likely to appeal to any first-time traders looking for flexibility.
- Nutmeg also lets you take advantage of a socially-responsible portfolio, if you want to automate your investments responsibly.
- Fees for Nutmeg are very fair, though it’s actually better value for you the more you save and invest.
- The service has stacks of great resources and advice sections.
- Some seasoned investors may find that there is more diversity in terms of options and products elsewhere.
Moneyfarm Pros and Cons
- Moneyfarm offers a careful, managed ready-made portfolio system based on your unique approach to risk.
- Historic data shows that Moneyfarm weathers volatility well, though this is no indicator for future performance.
- The website has several eBooks and helpful guides to ease you into the process.
- However, Moneyfarm offers fewer portfolio options and products than Nutmeg on the whole.
- Moneyfarm has a higher minimum investment threshold £500 to get started.
Nutmeg vs Moneyfarm: Verdict?
Both Moneyfarm and Nutmeg have lots going for them. However, it’s worth remembering that it may work out cheaper to invest in Moneyfarm depending on how much money you have to invest in the first place. 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.
So – for my money – Nutmeg just wins the day here. 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.