Nutmeg review: Automated ETF portfolios for UK residents with at least £100

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Is Nutmeg right for you?

Nutmeg is a J.P. Morgan Chase-owned investment platform offering automated portfolio management for investors in the UK. The platform offers products like general investment accounts, pensions, and individual savings accounts (ISAs). It best suits hands-off investors who value expert oversight and automated features like portfolio rebalancing and asset allocation.

Nutmeg also gives you access to several different portfolios — including socially responsible, smart alpha, fixed allocation, and fully managed portfolios — that invest in ETFs. Plus, you can utilize guidance from wealth managers.

Nutmeg vs. MoneyFarm

Nutmeg and MoneyFarm are both leaders in the UK digital investing space. Both offer general investment accounts, various ISAs, and pensions. Both also have expense ratios that sit near 0.20%.

But those with higher balances will pay less per year at Nutmeg. You'll need at least £100,000 to get the 0.25% fee at Nutmeg, but you'll need a minimum of £500,000 to qualify for MoneyFarm's lowest yearly rate of 0.35%.

Nutmeg vs. Vanguard Digital Advisor

Nutmeg and Vanguard serve different audiences: one caters to UK clients, while the other mainly focuses on US clients. But when it comes to automated investing, both primarily utilize ETFs when building personalized portfolios.

Though the value of the pound typically outweighs that of the dollar, you'll still need more to get started with Vanguard's automated account, Vanguard Digital Advisor. However, you'll pay less in advisory fees and fund fees.

Ways to invest with Nutmeg

Automated portfolio management

Nutmeg is a great option for hands-off UK investors who want their assets and accounts managed for them. Its products include general investment accounts, pensions, lifetime ISAs, stocks and shares ISAs, and junior ISAs (ISAs are saving and investing accounts offering tax-free allowances, and they're strictly for UK residents). When it comes to portfolio types, Nutmeg offers four:

• Fully managed: Nutmeg uses its investment team to build and manage these portfolios, and this option focuses on globally diversified ETFs. In addition, you'll be able to choose from 10 different risk levels, and Nutmeg regularly rebalances your assets and adjusts your allocation when necessary. The five-year average rate of return for these portfolios is 16.5%.
• Smart Alpha: Also managed by experts, these portfolios merge both the investment philosophies of Nutmeg and J.P. Morgan Asset Management. According to Nutmeg, these portfolios uniquely utilize research-driven security selection, while investing in both passive ETFs and J.P. Morgan-selected active ETFs.
• Socially Responsible: These portfolios are great for those who want to make an impact with their investments. They focus your investments into companies with high environmental, social, and corporate governance (ESG) standards. Plus, Nutmeg filters out ETFs with companies that practice harmful or controversial activities.
• Fixed Allocation: This option is great for those who want the least interference from Nutmeg's investment experts. You get access to automatic portfolio rebalancing, but Nutmeg's team only reviews your portfolio once a year. Since it isn't fully managed, it's a much cheaper option than the other portfolios.

You'll also have to account for fund costs (these are different for each portfolio). Nutmeg's fund fees are much higher than that of the ETFs used in US-based automated investing platforms. For instance, its fully managed portfolios have an average fund cost of 0.20%. Its smart alphas ETFs will cost you an extra 0.22%, and its socially responsible portfolios have a 0.29% average fund cost. Fixed allocations have an average fund cost of 0.19%.

However, some US platforms have expense ratios that can be as low as 0.05%.

Services and tools

Nutmeg also offers financial planning, and you can book a free call with its wealth managers to see which options best suit you. Plus, the platform offers several educational guides on topics like ETFs, ethical investing, and more.

It additionally provides access to free tools, including its self employed tax calculator, compound returns calculator, ISA calculator, and pension calculator.

Nutmeg: Is it trustworthy?

Nutmeg doesn't have a profile with the Better Business Bureau since it isn't a US company. But the robo-advisor is a legitimate business regulated by the Financial Conduct Authority. In addition, the platform's record is clear of any major lawsuits or scandals over the past few years.

Nutmeg — Frequently Asked Questions (FAQ)

Can you invest in individual stocks with Nutmeg?

No. Nutmeg doesn't let you buy individual stocks, nor does it allow you to choose which investments go into your portfolio. The robo-advisor creates and manages a personalized ETF portfolio for you.

Is Nutmeg good for beginners?

Since Nutmeg offers automated portfolio management for several account types, it could be a great option for newcomers in the investing space. You don't have to make the day-to-day trading decisions since Nutmeg handles all of it for you.

Are Nutmeg's fees worth it?

Nutmeg has fairly high fees for users with balances below £100,000. With its four different portfolio options, you'll either have to pay 0.75% or 0.45% if your account balance doesn't exceed the £100,000 threshold. Investors with more than £100,000 will pay much less in fees (e.g., 0.25% or 0.35%).

The answer to this question depends on your investment preferences.