Nutmeg Review: Is it the Right ISA Investment Platform for You?

Nutmeg is one of the new breed of investment advisors, known as robo-advisors, making the financial markets more accessible to those who can’t afford to hire a traditional advisor.

Their FCA-approved platform launched in 2011 and has won numerous awards, from Your Money and ETF.com among others. According to figures released in November 2017, Nutmeg has 48,700 customers and assets under management of more than £1 billion.

Nutmeg’s Account types

Nutmeg offers three types of accounts, so you should be able to find one that helps you achieve your investment goals.

Nutmeg ISA

You can open a stocks and shares individual savings account (ISA) and a lifetime ISA (LISA) with Nutmeg.

A stocks and shares ISA lets you invest up to £20,000 (in the 2018/19 tax year) and protects your returns from capital gains tax and income tax. You can set up this type of investment ISA with Nutmeg in 10 minutes and then access it at any time to track your portfolio’s performance and check how much you’re paying in fees.

You can also consolidate any ISAs you’ve opened in previous years by transferring them to Nutmeg for free, although your current provider may charge a fee.

A LISA helps you save towards retirement or a deposit for a new home. For every £4 you invest, the government tops up your savings by £1. You can contribute a total of £4,000 each tax year, giving you a maximum bonus of £1,000. Otherwise, a LISA offers the same benefits as the stocks and shares ISA listed above.

Nutmeg Pension (SIPP)

Another option is to start a personal pension with Nutmeg. As with all personal pension plans, the government pays tax relief on contributions of 25% (depending on your tax status).

You can log into your account 24/7 to monitor your pension’s performance or review your fees. You can also consolidate your pensions by transferring them to Nutmeg, but you may need to check with your current provider if they charge an exit fee.

General investing

Once you’ve used up your annual ISA allowance, or if you’re not saving for retirement, you can open a general investing account. It’s quick and easy to get started, and there’s no limit to how much you invest each tax year.

As with the ISA and pension accounts, you can log in at any time to track the performance of your investments and check your fees.

Top 10 Fixed-Rate Investment ISAs

Get Rates of up to 8% p.a.

Review of the Nutmeg Platform

Opening a Nutmeg Account

When opening an ISA or general investing account, you need to provide the kind of information a traditional advisor would ask for, such as your goals, your time horizon and how much you can afford to invest.

You also have to choose between a fully managed or fixed allocation portfolio – we’ll explain each of these options in greater detail later in this review- and the level of risk you’re willing to take on a scale of one to 10.

Nutmeg requires you to complete an online assessment to determine your attitude to risk when investing in the stock market. It’s important to take your time over your answers because they help Nutmeg understand your needs and recommend the right portfolio.

However, the assessment only consists of 11 questions, so it shouldn’t take too long, even for an inexperienced investor.

Nutmeg also asks you to confirm that you understand your projected returns and how much you’ll pay in fees, and it verifies that you’ve sufficient funds to invest (without dipping into your rainy day savings).

The process for opening a pension is slightly different.

Nutmeg asks you for your age today and when you plan to retire. You have to provide information about how much you would like to pay in and the level of risk you feel comfortable taking.

The platform gives you an opportunity to review your projected returns, estimated fees, portfolio breakdown and portfolio track record before asking you to complete the risk assessment outlined above.

Funding Your Nutmeg Account

For a stocks and shares ISA or general investing account, you can start investing with a lump sum of £5,000 or a £500 deposit and then a £100 monthly contribution.

The minimum investment in a LISA is £100 and in a pension is £5,000.

How you pay in depends on which type of account you open.

You can pay in a lump sum to a stocks and shares ISA or general investing account with a bank transfer or debit card (credit cards aren’t supported) or set up a monthly contribution by direct debit.

You can pay in to a LISA with a debit card too, but monthly contributions aren’t available for now. Bank transfer is the only way to pay in to a pension account.

Nutmeg App Review

You can download the Nutmeg app from the iPhone app and Google Play stores.

The functionality is similar to the website: the app allows you to track your investment’s performance and view your portfolio’s asset allocation. You can pay in or alter your monthly contributions for your stocks and shares ISA and general investing account, but the app doesn’t allow you to pay in to a LISA or pension yet. 

Nutmeg User ratings

If you’d like to find out what your fellow investors think of Nutmeg, check out its ratings on Trustpilot, a platform where users rate their experience of online services.

Nutmeg scores an average of 8.5 out of 10 based on over 400 reviews, and 88% of users rate their experience with the platform as great or excellent (as of 22nd June 2018). You can read user reviews in greater depth on Trustpilot’s website, while Nutmeg showcases written and video testimonials on their Reviews page.

Nutmeg Investment Strategy

As we described above, Nutmeg develops a solid understanding of your needs during the account opening process. You then have a choice between two types of investment portfolios: a fully managed portfolio or a fixed allocation portfolio.

The fully managed portfolio is actively managed by Nutmeg’s investment team who change the asset allocation in response to market conditions with the aim of avoiding losses and boosting returns. The fixed allocation portfolio sticks with the same mix of assets and only reviews it once a year to make sure it remains within the necessary risk parameters.

On the whole, Nutmeg builds its portfolios using exchange traded funds (ETFs) which typically aim to mirror the performance of a market index. ETFs are flexible as they trade on the stock exchange, and they’re cheaper to invest in than actively managed funds.

Nutmeg diversifies its portfolios with shares, bonds and cash from developed markets such as the UK, Europe, Japan and the United States and emerging markets. The amount of risk in each portfolio depends on the asset allocation- a low-risk portfolio contains a higher proportion of bonds and cash, while a high-risk portfolio consists mostly of shares.

Both types of portfolios are managed by Nutmeg’s expert investment team and are overseen by an advisory committee which closely monitors performance.

Remember, the value of your investments can go down as well as up, and you could get back less than you invest.

Nutmeg’s Track Record

Nutmeg provides a track record for each of its 10 investment portfolios over five years and dating back to when the portfolios launched in September 2012 (‘all time’ in the chart below).

You can also compare Nutmeg’s track record to its competitors over the same periods, as measured by independent research firm Asset Risk Consultants.

Don’t forget, past performance isn’t a reliable indicator of future returns.

Five years All time
Portfolio 1 4% 5.60%
Portfolio 2 11.70% 14.90%
Portfolio 3 14.90% 20.30%
Portfolio 4 19.70% 27%
Portfolio 5 22.70% 32.60%
Portfolio 6 24.90% 37.60%
Portfolio 7 32.20% 46.70%
Portfolio 8 37% 53.60%
Portfolio 9 43.40% 61.80%
Portfolio 10 46.90% 66.20%

*Accessed 22nd June 2018

Nutmeg Fees

Nutmeg tries to keep its fees as simple as possible, as you’ll see in the table below.

Up to £100,000 Over £100,000
Fully managed portfolios 0.75% 0.35%
Fixed allocation portfolios 0.45% 0.25%
Fund & trading costs (average)  0.30% 0.30%

You can figure out how much you’ll pay on a specific amount using Nutmeg’s widget.

Is the platform Nutmeg the right robo-advisor for you?

Nutmeg puts a strong emphasis on understanding your risk profile.

While this approach might make the account opening process longer than some other robo-advisors, it should provide you with peace of mind. Nutmeg also offers an extra layer of transparency by comparing each portfolio’s track record against its competitors.

However, make sure you shop around before settling on a robo-advisor. The key features may be similar, but others- such as the relatively high minimum investment required by Nutmeg- could influence your decision.

Keith McGuinness

Keith McGuinness is a freelance investment and trading writer and active investor and trader.