Nutmeg offers an excellent range of accounts, with a special mention going to the Lifetime ISA, which not that many platforms offer. All these accounts are available with a starting amount of £500, which is higher than some platforms but on par with Moneyfarm.
General investment account (GIA)
As always, the general investment account (GIA) is an excellent product for anyone who has maxed out their ISA allowance. You still get access to all the investment options at Nutmeg, but where this account stands out from competitor GIAs, is its access to human advisors.
There are a few ways that this can be of value to investors. Firstly, they can help you establish whether you have already taken full advantage of all the tax allowances on offer to you and whether the GIA is your next best option. They also offer advice on Capital Gains Tax, and how the reduction to the allowance will impact you.
Stocks and shares ISA
All the usual ISA tax advantages are available, as well as full access to the Nutmeg ready-made portfolios. The team will help you decide if this is the best product for you and can help with any ISA transfers that you may wish to make.
Read more about ISAs
Junior stocks and shares ISA
This is available to open on behalf of children under the age of 16. You can access all the investment options and expert advice on how best to grow your child's money, taking into account how long they have before they reach the age of 18 and the account is automatically changed to an adult ISA.
Lifetime ISA
This is a stocks and shares Lifetime ISA, a product less common but still the most efficient way to save for a first home. To see how the Nutmeg Lifetime ISA stacks up against all the other providers offering this product, see my Best Lifetime ISA article.
Read more about Lifetime ISAs
Pension
A pension can be one of the most valuable areas to seek human guidance and the Nutmeg pension offers just that. With a free call, the retirement experts can help you identify if this service would be of value to you. It comes at a cost (£575), but the upside of that is the peace of mind you will get knowing you are on track to achieving the retirement you want.
It’s a very tailored service but you should be aware that this is restricted advice. Meaning, that the advisors will only point you towards one of Nutmeg's products, unlike an independent financial advisor, who can point you towards the best product for you from the whole of the market.
If you are going to pay for advice that will point you towards a Nutmeg pension, then it's important to know that the pension you are matched with will perform well. Whilst the Nutmeg pension has performed better in the last year, the 3 and 5 year returns are very disappointing, which makes it difficult for me to recommend this platform for retirement savings. We would need to see some greater consistency for that to happen.
If you need more information about retirement, Nutmeg has a useful webinar available which will provide you with an overview of everything you need to know.
Read more about SIPPs
Portfolio performance
Below, I have compared Nutmeg's portfolio performance against those of other robo-advisors to provide you with a like-for-like comparison. They have performed well for medium to high-risk investors. However, I must point out that, when compared to the ready-made portfolios from across the whole of the market, these are less favourable results. For more information about the whole of the market, please see our full, ready-made portfolio analysis.
Lowest risk portfolio for cautious investors – 5-year average 10.8%
Medium risk portfolio for confident investors looking for a balanced portfolio – 5-year average 22.8%
High-risk portfolio for adventurous investors – 5-year average 44.4%
It is worth noting that these figures do not include any data from InvestEngine, the newest and lowest-cost platform to enter the robo-advisor space. This is because InvestEngine has failed to provide us with any historical data relating to the performance of their funds. In addition, while Moneybox offers ready-made funds, they do not risk match you with a portfolio; the onus is on the investor to pick their own portfolio and in this way, they are not considered a traditional robo-advisor. However, I have included them as a high-returning alternative. Check out my Moneybox review here.
Fully Managed
With ten risk levels to choose from, the fully managed option is provided for investors who would like the peace of mind of knowing that their investments are being constantly monitored and adjusted by industry professionals. You will be allocated a portfolio that consists of exchange-traded funds (ETFs).
Fixed Allocation
These portfolios will cost you less as they are designed to require human intervention just once a year. There are five risk levels to choose from here, with each portfolio consisting of ETFs again.
Fully Managed vs Fixed Allocation
You will pay slightly more to access fully managed portfolios on any platform so it's important to establish whether the returns suggest this is worth the extra cost.
Our analysis comparing like-for-like risk portfolios in both categories suggested that fixed allocation portfolios actually outperformed fully managed portfolios at Nutmeg. So unless they can produce evidence to contradict this, I would stick with fixed allocation.
Socially responsible investing (SRI)
If investing in line with your principles is important to you, then the SRI portfolios are designed to include companies that consider the risks that come from environmental, social, and governance factors. You can still choose from 10 risk levels to match your appetite and historically, these portfolios have performed in line with their non-SRI counterparts.
Read more about ETFs
Thematic Investing
If you are comfortable assuming some level of risk (level 5 and above), then Thematic Investing allows you to gain exposure to emerging trends or themes that could be about to shape our future, and therefore offer greater opportunity for growth. This can include themes such as AI, clean energy, and healthcare.
The way this works is that the thematic theme you have chosen will represent a total of 10% – 20% of your total portfolio, depending on your level of risk, with the remaining portfolio being actively managed.
If you are in any doubt about whether this option is right for you, then the Nutmeg team is on hand to advise.
John Choong, Senior Research Analyst on Thematic Investing
Thematic investing sounds like a good method for investors who don’t want to miss out on ‘the next big thing’. However, it’s worth noting that investing 10-20% of your portfolio in supposed ‘riskier’ assets could result in hefty losses. This may end up more than offsetting any gains made from the rest of your portfolio, as there’s no telling what sort of investments the Nutmeg team may make, whether it’s cash-generative companies, SPACs, or even potential scams.
Additionally, it should be worth noting that not every ‘theme’ has generated meaningful returns over the past decade either. The hype over blockchain technology, NFTs, and crypto might’ve resulted in extremely lucrative gains for some. However, many have also lost huge chunks of their money as a result of a lack of fundamental analysis, such as downside risk assessment, prior to investing.
Therefore, I’d advise potential investors who are thinking of getting into thematic investing to enquire about the sorts of investments the Nutmeg team plans to venture into before signing up for them.
Smart Alpha
The final option for investors is the Smart Alpha Portfolios, which are managed by JP Morgan Asset Management. These have been available since 2020, so no long-term portfolio performance is available, but Nutmeg promotes these portfolios as being managed in a way that can glean greater returns, while also including ESG factors.
Without any significant historical data, it would be difficult to recommend these portfolios, given their slightly higher price. They are comprised mainly of JP Morgan ETFs with a small holding of cash.
Robo Advisory services
When you sign up for Nutmeg, you will instantly be taken to a questionnaire, which will help the platform establish an investment style that is right for you as well as how much you can afford to invest. You will also receive potential outcomes and a complete breakdown of costs. This is a nice level of transparency that you don’t always encounter.
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