Nutmeg Review

Overall, we find it hard to recommend Nutmeg.

3.8
Nick's verdict

Nutmeg is a digital wealth platform that handles the hard work of investing for you. It assigns you a fully managed portfolio based on your appetite for risk and then you sit back and watch your money grow. When it first came out in 2011 it was leading the charge in making investing accessible to all.

In 2023 we find it less easy to get excited about Nutmeg. The acquisition by J.P. Morgan has given it increased credibility, but it feels much more boring and corporate than in its startup days. Its dashboard is beginning to look a little dated and there are other platforms providing similar services with lower costs and, crucially, better investment returns.

🧑‍🎓 Makes investing easy for beginners.

🏦 Backed by J.P. Morgan.

✅ Offers ISAs and pensions.

☎️ Great customer service.

Newer companies have better digital experience.

📉 Not the best returns record.

👛 Fees are higher than some rivals.

Overview

Nutmeg is an automated digital wealth manager that aims to make investing simple for everyone. Its core product is an online platform that assigns users a managed portfolio based on their preferences and risk tolerance. When you hear people talk about “robo-advisers” this is the sort of thing they are referring to.

When it was founded back in 2011, it was one of the first to do this in the UK. Now it’s a much more crowded market. The likes of Moneyfarm and Wealthify offer similar services while companies such as Plum, Lightyear and InvestEngine have brought out new innovative products that make investing accessible to the masses.

Despite the competition, Nutmeg has over 200k customers in the UK. Its reputation is key to this – but the performance of its funds hasn’t been stellar and it can be beaten by many rivals on costs.

It was bought by J.P. Morgan, the huge US investment bank, for £700 million in 2o21.

Account Options

[.custom-color]Nutmeg offers loads of accounts, so let’s run through their individual benefits.[.custom-color]

Stocks and Shares ISA (Individual Savings Account): This account enables you to invest in stocks, shares and funds with the benefit of tax-free gains and dividends. There’s an annual limit on how much you can contribute, which is £20,000 for the 2023 tax year. It’s a popular choice for medium to long-term investments, as it can potentially offer higher returns than a savings account, though with greater risk.

Lifetime ISA (LISA): Specifically designed for two main purposes: buying your first home and saving for retirement. If you’re under 40, you can open a Lifetime ISA and contribute up to £4,000 each year until you’re 50. The government adds a 25% bonus to your savings, up to a maximum of £1,000 per year. The funds can be used to buy your first home or can be withdrawn tax-free after you turn 60.

Junior ISA: This is an investment account for children. Parents or guardians can open a Junior ISA for a child, and the money is locked until the child turns 18. Like the Stocks and Shares ISA, it allows for tax-free gains. This account is a good way to build savings for a child’s future, whether for education, a first car, or a deposit on a home.

General Investment Account (GIA): A flexible investment account with no limits on contributions or restrictions on withdrawals. While it doesn’t offer the same tax advantages as an ISA, it’s a good option if you’ve already maxed out your ISA contributions or want more flexibility in terms of access to your funds.

Personal Pension: This is a long-term investment aimed at building a retirement fund. You get tax relief on contributions, and the fund grows tax-free. This account is particularly beneficial for self-employed individuals or those looking to supplement their workplace pension.

Costs

[.custom-color]Fees are higher than some rivals.[.custom-color]

Nutmeg’s fee structure is designed to be straightforward and transparent. Here’s a breakdown of the costs involved:

Management Fees: For fully managed portfolios, Nutmeg charges a fee of 0.75% on investments up to £100,000. Beyond £100,000, the fee is reduced to 0.35%.

They also offer fixed allocation portfolios. These are only looked at by Nutmeg’s investment management team once a year. The fee is slightly lower: 0.45% for up to £100,000 and 0.25% for amounts above £100,000. However, you might miss out on some investment opportunities that the Nutmeg team spots.

Investment Fund Costs: These costs average around 0.19%. They cover the expenses associated with the underlying investment funds within your portfolio.

Market Spread Cost: This is an additional cost averaging 0.07%, which is essentially the cost to buy the investments within your account.

Other Fees and Charges: Notably, Nutmeg does not charge any setup fees, exit fees, transaction fees, trading fees, or fees for standard withdrawals and account closures

Minimum Contribution: The minimum investment with Nutmeg is set at £500

Let’s see how this compares to some rivals:

Fee Nutmeg Moneyfarm Wealthify
Subscription Free Free Free
Platform Fee 0.75% up to £100k, 0.35% on portion beyond 0.75%-0.35% depending how much have invested 0.6%
Avg. Fund Fee 0.22% 0.2% 0.16%
Spread Fee 0.04% 0.09% Included
Yearly Charge on £1k £10.10 £10.40 £7.60
Yearly charge on £5k £50.50 £52 £38.00
Yearly charge on £10k £101 £99 £76.00
Yearly charge on £50k £505 £445 £380

So as you can see, Nutmeg is roughly comparable to Moneyfarm – but as we will see its fund performance has not been as good – and is more expensive than Wealthify by a considerable margin. We therefore can’t recommend it on price.

The Sign-Up & Portfolio Selection

[.custom-color]The signup process is easy.[.custom-color]

We personally signed up for the service – let’s walk you through it.

First, we were asked for a name and email address before selecting an account from the types we outlined above. We chose a General Investment Account and were informed that we’d need to invest £500 to start an account.

Next, we were taken through a questionnaire. Questions centred around our goals, the length of time we plan to invest, our starting contribution and our monthly contributions. We then picked our investment style. The options were:

Fully Managed Portfolio: These are actively managed by Nutmeg’s investment team. They adjust the portfolio in response to market changes and economic forecasts, aiming to optimize performance according to the chosen risk level.

Fixed Allocation Portfolio: These are designed to be a more cost-effective option. The allocation is set and automatically rebalanced, but it does not adapt dynamically to market changes like the fully managed portfolios.

Socially Responsible Portfolio: These focus on investments in companies and bonds that meet specific environmental, social, and governance (ESG) criteria. It’s a choice for investors looking to align their investments with their ethical values.

Smart Alpha Portfolios powered by J.P. Morgan Asset Management: These portfolios are built using J.P. Morgan Asset Management’s research and combine Nutmeg’s core investment principles with the additional expertise of J.P. Morgan. They aim to provide enhanced strategic asset allocation.

Nutmeg signup process tested

Once selected, we were asked to pick our risk/reward level between 1 and 10. 1 is the least risky and 10 is the highest. As you move up through the levels you are allocated fewer bonds and more equities.

Bonds are essentially loans to companies or governments. They offer a fixed income and are generally seen as less volatile than equities. Equities are stocks and shares in companies. These can vary in price dramatically over time but do offer a greater potential return.

We were then shown an overview of our potential pot. We like how Nutmeg presented this. It gave a really detailed view of past performance and projections for what your portfolio might be worth over time.

Next, we had to enter some personal details. This included address history, National Insurance number, salary and employment questions.

This was followed by a short quiz. We were asked questions regarding our investment goals and our level of anxiety about investing. We also faced some affordability questions to ensure we could actually afford to invest. All these questions were used to check we’d picked the right risk level (we hadn’t and it asked us to change).

We were then free to set up a Direct Debit and start using the platform.

The whole process took us 14 minutes. It was slightly more long-winded than it needed to be.

The Dashboard

[.custom-color]It’s quite basic.[.custom-color]

On Nutmeg’s dashboard, you can create up to 5 pots. If you click on a pot you can see performance (including return after fees) and an Environmental + Social + Governance (ESG) score for your portfolio. You can also dig down to view more details on the allocation of the funds you have invested in as well as the countries and asset classes they represent. We were disappointed by the lack of tools on offer – for example, MoneyBox has a house deposit calculator for those using a Lifetime ISA.

What Has Past Performance Been Like?

[.custom-color]Performance has been disappointing.[.custom-color]

We’ve compared Nutmeg’s performance against Moneybox, Moneyfarm and Wealthify since 2017. We’ve also worked out what a £1,000 investment would be worth in 2023 (excluding fees for simplicity).

Year Nutmeg Lowest Risk Moneybox Lowest Risk MoneyFarm Lowest Risk Wealthify Lowest Risk Nutmeg Middle Risk Moneybox Middle Risk MoneyFarm Middle Risk Wealthify Middle Risk Nutmeg Highest Risk Moneybox Highest Risk Moneyfarm Highest Risk Wealthify Highest Risk
2022 -5.4% -5.3% -8.1% -11.2% -13.2% -8.6% -9% -10.3% -9.6% -9.2% -12.3% -9.1%
2021 0.1% 4.6% -1.5% 0.48% 7.5% 18.1% 8.8% 6.7% 19.6% 22.6% 16.6% 12.89%
2020 -0.8% 3.7% -0.2% 2.7% 6.2% 8.4% 2.9% 4.87% 7.2% 8.6% 6.3% 5.06%
2019 1.2% 6.9% 2.9% 6.43% 11.1% 18% 11.7% 11.96% 18.7% 20.6% 19.8% 17.14%
2018 -0.5% 0.6% -0.6% 1.65% -5.9% -2.6% -4.5% -4.43% -9.8% -3.6% -5.9% -7.62%
2017 -0.1% 0.8% 0.8% 2.21% 7.1% 7.1% 6.2% 4.39% 13.6% 9% 12.3% 7.72%
How much is £1000 invested in 2017 worth in 2023 £945 £1114 £931 £1,013 £1110 £1440 £1154 £1121 £1410 £1532 £1376 £1257

So Nutmeg hasn’t had the best results when compared to competitors – and its middle-risk portfolio actually returned the smallest profit of all four.

We also have to point out that if you’d just put your money into an S&P 500 tracker fund you would have turned the £1,000 into £1,715 over the same time period – which blows away the performance of all these providers.

How Good Is Customer Service?

[.custom-color]Nutmeg has good customer service.[.custom-color]

Nutmeg offers a phone line (which we didn’t expect from a digital-first platform). It’s open from 9 am to 5.30 pm on weekdays (till 4.30 pm on Fridays). We gave them a call to test wait times and were pleasantly surprised when we got through to a rep in just 23 seconds.

Live chat is also offered during the same hours – in testing we were connected instantly to an adviser.

Nutmeg also offers a financial planning service. It’s free if you want to talk specifically about Nutmeg, but for anything wider you will be charged £575! Lots of financial advisers work on a percentage fee so this might be reasonable for those with large portfolios, but for most, we don’t think this represents good value.

Is It Good For Beginners?

[.custom-color]Yes, Nutmeg is good for beginners.[.custom-color]

Nutmeg is great for beginners but it’s quite poor for everyone else. Its service is much hassle-free, but if you think you will ever be interested in anything beyond the most high-level overview of your money’s performance you will probably want to choose another provider.

For those looking to increase their knowledge, the “Discover” section provides general market news and education – but it’s very J.P. Morgan-y and corporate

Is It Safe?

[.custom-color]Yes, it’s generally considered safe.[.custom-color]

Nutmeg is regulated by the Financial Conduct Authority, ensuring compliance with stringent consumer protection standards. Client funds are held in segregated accounts for added safety. Additionally, Nutmeg’s customers are covered by the Financial Services Compensation Scheme, offering compensation of up to £85,000 if the company fails.

As mentioned, Nutmeg is also backed by J.P. Morgan, one of the world’s largest financial institutions.

However, as with any investment, there’s market risk involved, and the value of investments can fluctuate.

So, Is Nutmeg Any Good?

Overall, we find it hard to recommend Nutmeg. It does provide simple investing options and its customer service is great. However, there are now many better wealth platforms that offer greater returns, lower fees and a nicer digital experience.

More reviews from us...
By clicking “Accept All Cookies”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. View our Privacy Policy for more information.