Nutmeg

review: is it any good?

Updated on
February 27, 2021

In a nutshell

Want to make your money work for you, but not sure how? Then Nutmeg could be for you. They handle all the investing for you for a simple low fee – you just sit back and watch your money grow, whenever and wherever you like.

Our rating

Nuts About Money Logo

Nutmeg

 cracked open 🥥

Nutmeg. What do they even do? and are they good at it? What’s the experience like? Let’s find out.

Nutmeg. We’re not talking the Starbucks pumpkin spice latte kind, we’re talking the largest ‘digital wealth advisor’ in the UK. That’s jargon for a website and phone app on the internet to manage investments for you, and that’s jargon for putting your savings to work and making you more money as you go through life. If you don’t invest already, you should be! And Nutmeg could just be the answer for you.

So here’s what Nutmeg do in a bit more detail. You choose a ‘product’ to suit you and what you’re looking for, a product is basically an account. Anyway, all the products are listed below, they range from pensions to Junior ISAs, and everything in between.

Let’s say you are a ‘normal’ person, and want to start saving, or more importantly, putting your savings to work, then you’d go with a Stocks and Shares ISA, which is an account that allows you to invest up to £20,000 per year completely tax free, so the increase in your money is all yours to keep – the tax man can’t get his hands on any of it.

Open the account, easy peasy, add your savings, run through how you want to invest (all detailed below), and then here's where it gets good, keep adding more money each month. Use this as your savings account. That's the key to building a large investment over time.

Watch out though, you can only open one new Stocks and Shares ISA each year (April to April), so if you've got one with another provider already, you'll have to wait until April to open one with Nutmeg.

Here’s the full range of Nutmegs products:

  • General investments (a ‘normal’ account with no tax-free benefits)
  • Stocks and shares ISA (tax-free investments of up to £20,000 per year)
  • Lifetime ISA (25% government bonus for investing in your first home or retirement)
  • Pension (25% government top-up for your retirement)
  • Junior ISA (tax-free contributions for your children, up to £9,000 per year)

About Nutmeg themselves

'Investing should be a clear and straightforward experience'. We like the sound of that. That’s what Nutmeg have built with their website and app.

Well specifically, and quite confusingly, they “build and manage diversified portfolios using technology to keep charges low and clearly show where you’re invested”.

Put simply, you’ll always know where your money is, and you can pick from a range of funds to put your money in, all by using Nutmeg on the web or on your phone. (We’ll come to funds later).

They have over 100,000 customers, not too bad at all. That’s a lot of money ‘under management’ too, over £2 billion. And for a company that started in 2012, those numbers are pretty good, they must be doing a few things right.

They’ve also won ‘Best Online Stocks & Shares ISA Provider’ in the ‘Yourmoney.com awards’ for 5 years in a row. So good it almost sounds like a fix.

What else should you know?

Can I access my money if I need to?

Your money is not locked away, you can get it out within a few days, so don’t panic!

However you should be investing with a long term view and keeping it in as long as possible, at least until you need it. Why? Well, that’s because of what’s known as compounding interest, where the money you gain each year as part of the investment return, then starts making returns itself, and these add up to a lot over time.

There’s also no fees to take your money out either (exit fees). Great news.

What’s the minimum investment?

Really low. You can actually invest with as little as £100 (or £500 depending on the product), so no need to hang about saving in a bank account. Get your money working for you as soon as possible!

Can I change my investments?

Yep, you can move your money around within Nutmeg whenever you like, change investment styles or move to a different level of investment risk. (more on investment styles below).

What's the customer service like?

Pretty good, it’s rated 4.3 out of 5 on Trustpilot, which gives it an excellent rating.

There’s real customer service people, ready to help you, or answer any question you have, on the phones, email and even on live chat.

Here’s one review we particularly like, mostly because they’ve used actual figures and knock the banks!

“Love Nutmeg: put 6k in 18 months ago and have already seen a positive return of 14% (at this point in time). Have now set up a lifetime ISA and two ISAs for my kids. Love the graphs they produce too. The way they display information is a refreshing change from normal banks.”

Investments: the good stuff

Nutmeg only invest your money in exchange-traded funds (ETFs), which are a group of investments itself, rather than investing directly into one or a few specific companies. So an ETF might have 100 companies it invests in, and Nutmeg simply puts your money into the ETF, and voilà, your money is now essentially in all 100 companies too.

Which ETFs your money goes into is decided by the experts at Nutmeg, who then use Nutmeg technology to buy and sell the fund. The ‘robots’ do not make any investment decisions, your money is in safe, human, hands. Well, all except from one investment style, where the robots reign! More on that below.

ETFs are low cost, transparent and flexible, so you get low fees and transparency using Nutmeg too. They typically track markets, such as the top companies in the UK (FTSE100), rather than try and make as much money as possible, which often puts your money at a higher risk. 

Essentially, they are a safer way of growing money over a long period of time.

Types of investments you can do (investment styles)

There’s four ‘investment styles’ you can pick from when opening your nutmeg account. Avoid the confusing name, but it’s basically how you’d like to invest your money with Nutmeg, so your options are:

Fully Managed

This investment style is where the experts at Nutmeg are looking at news, data and analysis to manage your money day-to-day and decide where to put your money – that’s which ETFs to invest in, and this changes over time depending on what happens in the economy and what the experts say.

Smart Alpha

So this is where it gets confusing. ‘Alpha’ in finance is a measure of how much an investment has ‘beaten the market’ i.e. how much it has beaten a suitable market index, confused yet? 

Let’s imagine an index, which is something that measures a stock market, or part of a stock market, in this case, let’s use the FTSE100 index, which is the top 100 companies in the UK. Alpha would be any returns above the returns you would get just from investing in the FTSE100. Make sense? So it’s return above the market.

What this means for Nutmeg, is the Smart Alpha investment style aims to return more than just investing in a regular ETF that tracks the market, and without any additional risk. They do this by following an investment strategy set out by J.P. Morgan’s global research team. Sounds pretty smart to us.

Fixed Allocation

This is very similar to the ‘fully managed’ investment style, with experts selecting which investments (ETFs) to put your money into, however the ‘robots’, aka the technology, will decide when to make changes to the investments, rather than the human experts. And as a result, this style is actually cheaper for you.

Socially Responsible

Conscious about the environment and climate change? We are too! This investment style will only invest in environmental and socially responsible investments, so no fossil fuels or tobacco companies, or anything that has a negative impact on the environment or society. 

Plus, it considers governance (how companies are run), so no bribes or excessive executive pay.

All together this is known in the industry as the ESG framework (environmental, social and governance). Learn more here.

Don’t forget the risk level

So the above is about investment styles, but within these styles, there are also levels of risk you can choose from, on a scale of 1-10 (10 being most risky). Typically, as in almost all investments, the higher risk, the higher reward you can expect, although this doesn’t mean you will actually get a higher return all the time.

Your risk level dictates which funds Nutmeg will buy on your behalf, with lower risk having a bigger allocation of safer investments such as bonds (which are like loans to companies looking for money and then pay you interest). Higher risk funds have a higher allocation of shares in companies (called equities), and often in developing economies.

It’s up to you which risk level you choose, however it’s often dictated by your age; as investments are a long term strategy, if you’re younger, time’s your oyster, and you can have a higher risk strategy as you shouldn’t need the money any time soon and so can hold out if returns aren’t particularly great or your investment drops in value. 

Whereas if you think you need the money back at some point soon, such as for a large purchase or even retirement, you might consider a lower risk investment strategy which aims to preserve your investment (alongside lower returns).

What’s the investment performance been like?

Not too bad, if you went for a middle of the road, level 6 out of 10 risk, using their Fully Managed investment style, you’d be seeing a return on your investment of 57.1% over 8 years, compared to 50.9% from alternative investment providers (peers).

Is it expensive?

Because Nutmeg is built on exchange-traded funds (ETFs) that are relatively cheap fees wise (ETFs discussed above if you want more info on those), it means Nutmeg can offer you low fees too.

For more managed investment styles, Fully Managed, Smart Alpha and Socially Responsible, you’ll be charged 0.75% up to £100k, and above that just 0.35%. For the automated, non-managed Fixed Allocation investment style it’s cheaper at 0.45% up to £100k, and 0.25% after that.

However, you’ll also be paying for the investment funds your money is in too (ETFs), and what’s known as market spread, which is the difference between the purchase price and the sale price of the funds that Nutmeg buys.

So, add all the fees together and that’s what you’ll ultimately pay, around 1% per year. Which is pretty good. For an investment adviser and more managed investments, not with Nutmeg, you are looking at considerably more, and they're mostly not for us ‘normal’ people – too expensive.

All fees are automatically deducted from your Nutmeg account, you don’t need to worry about paying separately.

Here’s a full breakdown of the fees for each investment style:

Fully Managed fees

Nutmeg fee: 0.75% up to 100k, 0.35% on the total after this.

Fund cost: 0.19%

Market spread: 0.07%

Smart Alpha fees

Nutmeg fee: 0.75% up to 100k, 0.35% on the total after this.

Fund cost: 0.19%

Market spread: 0.07%

Fixed Allocation fees

Nutmeg fee: 0.45% up to 100k, 0.25% on the total after this.

Fund cost: 0.17%

Market spread: 0.07%

Socially Responsible fees

Nutmeg fee: 0.75% up to 100k, 0.35% on the total after this.

Fund cost: 0.31%

Market spread: 0.07%

And here’s a cool tool to work out how much it would cost you based on your investment amount.

Our thoughts

What we really like about Nutmeg is it gives everybody the chance to invest their money, and make their money work for them. And everybody should!

The best way to build wealth and increase your savings over the long term is to have your money working for you. And Nutmeg helps you do that. You don’t need to be an expert in finance – you don’t even really need to know what an investment is!

All you need is a Nutmeg account and you’ve got the experts investing for you, and for pretty cheap. Better yet, you get a great app, with complete transparency over your money and some cool charts to show how much your money is growing 📈

Nutmeg brings investing to everyday people, and makes it super easy, it’s 5 stars from us.

Is there a deal?

Yep! 🎉

And we’ve got a pretty good deal for you guys! Get zero Nutmeg management fees for a whole 6 months after you invest. That’s the 0.75% annual fee from Nutmeg, completely free for 6 months. Not too bad at all.

All you need to do is sign up here when you’re ready. If you'd like to learn more about Nutmeg, you can visit their home page first, and just come back here to get to the deal when you're good to go. 

Oh and full transparency, we’ll get a small fee too, but as always, we’re completely impartial.

Is Nutmeg for you?

If so, get your first 6 months fee free with us.

Get started here¹

Share with a friend

Need more help?

Nuts About Money Logo

We’re here to help ease money worries for everyone by providing an easy to use website for all things money related.

About us