Home // Investing // Nutmeg Review – Spice Up Your Investing?

Nutmeg Review – Spice Up Your Investing?

What is Nutmeg?

Nutmeg is a digital investment platform, launched in the UK in 2011. They claim they are the ‘largest digital wealth manager in the UK’. They differ from some other investment apps such as Freetrade or Trading 212 in that rather than allowing customers to trade, the company gives a range of options related to your risk levels and the type of investment you want, then does the trading for you. In this way they essentially act as a ‘robo-advisor’.

What is a robo-advisor?

A robo-advisor is essentially the same as a financial advisor, but rather than be given investment advice by a person, the platform uses their automated systems and algorithms to invest for the customer.

As of 2022, Nutmeg claim to be the largest digital robo-advisor style app in the UK, with over 185,000 customers and over £4 billion of investments held with them. In 2021, Nutmeg was purchased by JP Morgan bank.

Nutmeg Review
Nutmeg Review | Picture: iStock.com | Tetiana Lazunova

Contents

How does Nutmeg work?

Nutmeg offer the following products:

  • General Investment Account
  • Stocks & Shares ISA
  • Lifetime Isa
  • Junior ISA
  • Pension

Once you have set up which of these you require, you then need to create ‘pots’ to put your investment funds into. You can create as many pots as you wish.

You can then choose the type of investments you want to put into it. Nutmeg focus very much on Exchange Traded Funds (ETFs). Nutmeg have 4 different investment ‘styles’ that you can choose from:

Fully Managed

These funds are managed by the Nutmeg investment team.

Smart Alpha

These funds are managed by JP Morgan Asset Management (part of the bank that owns Nutmeg).

Socially Responsible

Includes only investments that are seen as socially conscious, and managed by the Nutmeg investment team.

Fixed Allocation

Unlike the other 3 fund types, these are designed to perform without regular management, and are only reviewed once per year.

Each of the above fund types has a different pricing structure, which we outline below.

Finally, Nutmeg will ask you the level of risk you wish to have, as that will determine which funds they invest your funds into. Each different product will have a different range of levels, but it will usually be something like 1 to 5 or 1 to 10, with 1 being the lowest risk, and the higher number being the higher risk. You can change the risk level on each of your pots at any time. Obviously your returns will depend on which risk level you choose.

In addition to the above automated funds, Nutmeg also offer in-person financial advice.

How much does Nutmeg cost?

Nutmeg costs are divided up into 3 types:

  • Nutmeg Costs
  • Fund Costs
  • Market Spread

The level of these costs depends on which investment style you choose. The amounts are an annual percentage of the total amount you have invested.

Fully Managed

Nutmeg Costs – 0.75% up to £100k, 0.35% on amounts above £100k

Fund Costs – 0.20%

Market Spread – 0.07%

Total Cost – 1.02% up to £100k, 0.62% on amounts above £100k. For a total investment of £50,000, this would cost £510 per year.

Smart Alpha

Nutmeg Costs – 0.75% up to £100k, 0.35% on amounts above £100k

Fund Costs – 0.23%

Market Spread – 0.07%

Total Cost – 1.05% up to £100k, 0.65% on amounts above £100k. For a total investment of £50,000, this would cost £525 per year.

Socially Responsible

Nutmeg Costs – 0.75% up to £100k, 0.35% on amounts above £100k

Fund Costs – 0.28%

Market Spread – 0.07%

Total Cost – 1.1% up to £100k, 0.7% on amounts above £100k. For a total investment of £50,000, this would cost £550 per year.

Fixed Allocation

Nutmeg Costs – 0.45% up to £100k, 0.25% on amounts above £100k

Fund Costs – 0.19%

Market Spread – 0.07%

Total Cost – 0.71% up to £100k, 0.51% on amounts above £100k. For a total investment of £50,000, this would cost £355 per year.

Some investment apps use Open Banking to take savings directly from your bank account. Check out our reviews of Plum, Chip and Moneybox.

Who is Nutmeg for?

As a robo-advisor, Nutmeg do most, if not all of the work for you. If you are someone who wants to get into the details i.e. researching which stocks and shares to buy, then Nutmeg is probably not for you – you would be better off using a low-cost trading app such as Trading 212 or Etoro, or a larger trading platform like Hargreaves Lansdown.

Nutmeg would really suits those who want to just put in their money, and then leave it to grow over time. Nutmeg invest your money mainly with ETFs, which are designed to diversify the individual stocks and shares within them, and show long-term growth, so it does make sense to have a longer term investment goal i.e. years or even decades long, to get the best out of Nutmeg.

Is Nutmeg safe?

Nutmeg is fully regulated by the Financial Conduct Authority (FCA) in the UK. As part of the FCA’s rules for investment companies, Nutmeg have to keep all customer funds completely separate from their own company funds.

In addition, customer funds held in investments with Nutmeg are covered by the Financial Services Compensation Scheme (FSCS). This means that in case of their insolvency, each customer is covered up to £85,000.

Nutmeg provides investments. Therefore it is crucial that all customers are aware of the risks inherent in any investment. There is always the risk losing money, and it is even possible to lose all of your investment. However, with Nutmeg, as they focus on ETFs, this is less likely as you investment is diversified rather than concentrated in single stocks and shares.

Nutmeg Reviews – what are people saying?

Nutmeg has a rating of 4.1 out of 5 on Trustpilot from over 1200 reviews. 74% of the reviews are rated 5 out of 5 – Excellent. These satisfied customers praise how easy the service is to use, and how they can invest with a minimum of fuss. 9% of the reviews rate Nutmeg as 1 out of 5 – Bad. These unhappy users largely complain about poor performance of investments, with some being unhappy about issues not being resolved satisfactorily by customer service.

Nutmeg Alternatives

Other robo-advisor investment platforms out there include Moneyfarm and Wealthify.

If you wish to be more hands on with your trading, you can look at platforms such as Freetrade, Trading 212 or Etoro.

Nutmeg Pros & Cons

Pros

As a robo-advisor, Nutmeg runs your investments cheaper than a human financial advisor would.

Nutmeg works well for those who wish to have little involvement with the management of their investments.

Cons

If you want to trade individual stocks and shares, then Nutmeg is not for you.

Conclusions

Nutmeg are the biggest robo-advisor investment platform in the UK, and for good reason, as their platform is simple to use and has a transparent pricing structure. If you are looking to be more hands-off with your investments, then it is definitely worth investigating further.