In a way, investing has never been easier.
There are dozens of platforms offering to simplify your investing, and the rise of Robo-advisors means that savvy investors are spoilt for choice when it comes to low-fee, diversified online portfolios.
Moneyfarm and Nutmeg are two of the most popular investment platforms in the UK. Both cater to a range of customers from millennials to first-time-buyers, to pensioners.
Both platforms claim to offer a user-friendly experience, with low fees and a wide range of investment options.
While Moneyfarm and Nutmeg certainly have their differences, at first glance it can be hard to differentiate between the two. So, we’ve done the research for you to compile a list of pros and cons of Moneyfarm vs Nutmeg.
Read on to learn more about which platform could be right for you.
Compare Our Top 10 UK Investment Accounts
Moneyfarm – the pros
- No minimum investment
There is no minimum threshold for your investment – you can literally open a stocks and shares ISA with just £1.
This is great for investors who are unwilling to commit all their savings to the platform, or investors who like to spread their money across a number of different platforms.
- Quick set-up time
It takes as little as two minutes to set up a Moneyfarm account, and the interface is very user friendly.
This is particularly useful for investors who are a little less tech-savvy, or for professionals who are looking for a more streamlined experience.
- Free ‘dummy’ portfolio
This is a great feature for nervous investors as it allows you to test the waters with a ‘dummy’ portfolio in just a few minutes, so you can see where your money would hypothetically be invested if you opened an account with Moneyfarm.
- Low fees
Moneyfarm charges no management fees at all on balances between £1 and £10,000 and on any balance above £1m.
For accounts worth between £10,001 and £100,000, there is a 0.6 per cent management fee, and between £100,001 and £1m it is 0.4 per cent.
Additional fund fees are 0.3 per cent on average, regardless of the amount in your account.
Read the full Moneyfarm Review
Moneyfarm – the cons
- Short track record
Moneyfarm was established in Italy 2011 but did not arrive in the UK until 2016, so it does not yet have a long track record of performance.
Most experienced investors like to see a ten or 20-year investment cycle, so that they can get a sense of the manager’s performance during a range of different economic situations.
We don’t yet know how Moneyfarm would cope with another financial crisis, or a sudden rise in the base rate, for instance.
Nutmeg – the pros
- Low fees
Like Moneyfarm, Nutmeg has an easy-to-follow fee structure which rewards users for investing more with the platform.
On balances under £100,000, you pay 0.75 per cent for a fully managed portfolio, and 0.45 per cent for a fixed allocation portfolio.
On balances above £100,000, you pay 0.35 per cent for a fully managed portfolio and 0.25 per cent for a fixed allocation portfolio.
There is also an average underlying fund fee of 0.19 per cent, regardless of your account balance. There are no set-up fees, and no charges for rebalancing your portfolio.
- Quick set up time
New users can set up a Nutmeg ISA, LISA or pension fund within ten minutes. This allows individuals who know what they’re doing to get started quickly, and removes barriers for entry to less confident investors.
- Established name
Nutmeg was one of the first online investment managers to launch in the UK.
Since it arrived in 2011, it has gone on to attract more than one million customers, with more than £700m in assets under management, making it the largest Robo-advisor in the UK.
By contrast, Moneyfarm has around £260m in assets under management, and approximately 10,000 customers.
- Range of investor profiles
Like all R-advisors, Nutmeg relies on a series of questionnaires in order to build up a risk profile of each potential investor.
But unlike other Robo-advisors, there are as many as ten different possible investor profiles available, ranging from “very conservative” to “aggressive”.
The wider range of options makes it easier for investors to find the most suitable portfolio.
Nutmeg – the cons
- Higher minimums
To open a basic Nutmeg ISA, you have to deposit a minimum of £500 in your account, and then at least £100 each month until you have invested at least £5,000.
If you were to set up a direct debit for these minimum investment amounts, you would be committing yourself to almost four years of regular monthly payments.
This is a great way for Nutmeg to retain customers, but not so great for investors who like to have the flexibility to switch platforms or withdraw their money at short notice (although it should be noted that Nutmeg’s ISA investors can withdraw their money at any time).
Minimums are smaller for the newly-released Lifetime ISA (LISA), which younger investors can access with just £100.
However, it is worth noting that there is a £4,000 per year limit on LISA savings, which equates to around £333 per month.
To open a pension fund with Nutmeg, you need a minimum initial deposit of £5,000.
Moneyfarm Vs Nutmeg: Conclusion
Of course, you aren’t limited to just two options when it comes to easy-access investing.
There are plenty of other online investment managers on the market, including Wealthify, Scalable Capital, True Potential Investor and Munnypot – to name just a few – as well as well-established fund supermarkets like Hargreaves Lansdown and Fidelity.
All of these companies promise to take care of your ISA allowance and invest in a risk-appropriate portfolio for the lowest possible fees.
What Moneyfarm and Nutmeg offer is the reassurance of brand recognition and a healthy dose of competition in the growing online investment marketplace.
In its first year, Moneyfarm UK has seen considerable growth, while Nutmeg has slashed its fees in bid to retain and attract more customers.
In short – it is very much a buyer’s market for investors. Just as long as you are aware of the cons as well as the pros.
Nutmeg Versus Moneyfarm - Comparison
|Investment Account Comparison||Founded||Assets under management||Track Record of Returns||Fees||Minimum Investment|
|Nutmeg||2011||£700m||10 different portfolios with different risk tolerances. 3 year returns ranged from 1.8%-8.9%,||0.75% under £100,000 for a fully managed portfolio. |
Avg underlying fee of 0.19%. It reduces further the more funds in the account.
|£500 (Then £100/mth until £5,000)|
|Moneyfarm||2011, but only launched in UK in 2016.||£260m||Only 1 year of published results. 6 portfolios with varying risk levels with returns of 4.9% - 14.8% in 2016.||No fees on balances up to £10k, raising to 0.6% on balances up to £100k. It reduces further the more funds in the account. Additional fund fees are 0.3% on average.||£1 to open stocks and shares ISA.|
Also published on Medium.