Nutmeg is a good digital wealth manager. Their experts will handle everything for you. However, the investment track record isn’t the best, and they’re one of the most expensive. Plus, questionable socially responsible options. There’s better options out there (we’ll run through them).
Nutmeg. How does it work? Are they any good? Is my money safe? And are there better options? Let’s find out.
Nutmeg is one of the larger ‘digital wealth advisors’ in the UK. That means a mobile phone app and website that invests your hard earned money for you – putting your savings to work and hopefully making you more money as you go through life. If you don’t do this already, you should be!
All you have to do is simply choose the type of savings account you’d like. These range from a Junior ISA to a pension and everything in between (explained below). Add your money, select an investment style (again, more on that later), and done! Sit back and watch your money grow.
But is it right for you and are they the best out there? Let’s find out.
Spoiler: they’re not the best. There’s better options out there such as the top rated Moneyfarm¹. They’re easy to use, have great expert advisors, lower fees and better investment performance.
If you’re only looking to save into a pension, check out PensionBee¹, they’re 5* rated, easy to use, have a great investment record and low fees.
About Nutmeg
Nutmeg has been around for a while now, since 2012 in fact. And have over 150,000 customers. Pretty popular! With a combined amount invested of over £2 billion.
They started with a mission to make investing a ‘clear and straightforward experience’. We love that. And it’s what Nutmeg built with their app and website. You’ll always be able to see how your investments are performing, and have the flexibility to change how and where your money is invested.
In 2021, Nutmeg was bought by the American bank J.P. Morgan Chase, and all the investments behind the scenes at Nutmeg are with J.P. Morgan.
So, by being a customer you won’t be supporting a growing UK business anymore, you’ll be funding a mega-corporation. They also don’t have the best reputation when it comes to investing and climate change (they’re one of the biggest investors in fossil fuels).
If this concerns you, check out Moneyfarm¹. They’re a digital wealth manager just like Nutmeg – except they have cheaper fees, have a better history of making money for customers, and provide you with a free personal advisor – someone by your side, to help with your investments and any questions you might have. Here’s our Moneyfarm review to learn more.
Is Nutmeg good for beginners?
Yep, it’s a good option for beginners, mostly because you don't need any previous knowledge or experience in investing. It’s all managed for you by professionals, you can just sit back, relax and watch your money grow.
However, you do need to add a minimum of £500 to open your account (£100 for Lifetime ISAs).
If you want to start with less than this, check out Moneybox¹, they’re great too, and you can start with just £1. Here’s our Moneybox review to learn more.
Investment options
Nutmeg offer the full range of investment account options in the UK, which are:
- General investment account (GIA)
- Stocks & Shares ISA
- Lifetime ISA
- Pension
- Junior ISA
You’ll always be able to see how your investments are performing and you get the flexibility to change how and where your money is invested, and how much risk you want to take (more on this later).
Let’s dive into each one briefly:
General investment account (GIA)
This is a ‘normal’ account with no tax-free benefits. You’ll pay Capital Gains Tax on any money you make over £3,000 (if you sell), and you’ll pay 10% if you earn less than £50,270 per year (in income), or 20% if you earn more. This is from all of your investments, not just with Nutmeg (except investments in an ISA).
Here’s where to learn more about General Investment Accounts.
Stocks & Shares ISA
This is the most popular account for investing. You can invest £20,000 per year (your ISA allowance), and all the money you make in the future is completely tax free!
We’ve got a great guide to if you want to learn more.
Lifetime Stocks & Shares ISA
This is Stocks & Shares ISA on steroids! Not only is everything you make completely tax-free, but you’ll also automatically get a 25% bonus from the government on all the cash you put in.
There is a £4,000 per year limit though, and it’s only for buying your first home, or saving for later in life (not as a replacement for a pension).
If you're interested in getting a Lifetime ISA, check out Tembo¹. They've got one of the highest interest rates out there, the app is easy to use, it’s low cost overall (free to save cash), and the customer service is excellent. Here's where to learn more about the best Lifetime ISAs.
Junior Stocks & Shares ISA
These are perfect for saving for your children. You can save up to £9,000 per year, completely separate from your own £20,000 ISA allowance. It will all be in your kids name, and they’ll get access to it when they turn 18.
Check out the Best Stocks and Shares Junior ISA, and learn more about Junior ISAs here.
Pension
You can create a personal pension with Nutmeg.
A personal pension gives you control over where your pension money is invested, and you get a bonus from the government of 25% for everything you pay in.
And if you’re a higher rate tax payer, earning more than £50,270 per year, you can claim 40% back on some of it too (and 45% if you’re an additional rate taxpayer).
Nuts About Money tip: if you’re just looking to open a pension, it’s worth checking out pension-specific providers, as they can be cheaper. Pensionbee¹ is one of the most popular, has a great track record and low fees. Here’s our Pensionbee review to learn more.
You can also learn more about pensions and find all your options with our guide to the best personal pensions.
Nutmeg investments
Nutmeg invests your money in exchange-traded funds (ETFs). This means your money is invested in a wide range of investments (such as shares of a company), all grouped into a single investment, a ‘fund’. This helps manage risk and makes it much safer than investing directly into one or a few companies.
Which ETFs your money goes into is decided by the experts at Nutmeg, who then use technology to buy and sell investments. Your money is managed by safe, human, hands. Well, all except for one investment style, where the robots reign! (More on that below).
ETFs are low cost, transparent and flexible. So, you get low investment fees and transparency using Nutmeg too (and all the best robo-advisors).
Nutmeg investment styles
There’s four ‘investment styles’ you can pick from when opening your Nutmeg account.
It's how you’d like to invest your money on the platform (app or website), 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.
Smart Alpha
So this is where it gets a little confusing. ‘Alpha’ in finance is a measure of how much an investment has ‘beaten the market’ i.e. how much it has beaten investing in all of the companies within a stock market (called an index).
What this means for Nutmeg, is the Smart Alpha investment style aims to return more than just investing in an ETF that tracks the stock market. They do this by following an investment strategy by J.P. Morgan’s global research team.
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 businesses, so no fossil fuels or tobacco companies, or anything that has a negative impact on the environment or society.
However, just because there’s one option to be socially responsible, doesn’t mean Nutmeg, or their parent company, J.P. Morgan Chase is socially responsible. In fact, they're one of the biggest investors in fossil fuels out there.
If this concerns you, check out Moneyfarm¹ – they’ve got great socially responsible options, and are some of the strictest out there in terms of investment criteria.
Nutmeg risk levels
So the above is about investment styles, but within these styles, there are comfort levels of risk (meaning how you feel about keeping your money safe vs risking some for more money) you can choose from, on a scale of 1-10 (10 being most risky).
Typically, as in almost all investments, the higher the risk, the higher reward you can expect over a long period of time. Although it doesn't mean you will actually get a higher return, it depends on the success of the investments.
And with a lower risk option, there will be fewer up-and-downs, but your money is likely to grow less over time.
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 your investments drop in value over the short term (1-5 years).
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 steadily increase your investment.
Nutmeg investment performance
As part of our analysis into the best Stocks and Shares ISAs, we carried out a review of the investment performance of the 3 most popular investment apps: Wealthify, Nutmeg and Moneyfarm. And, we compared with the industry average.
We covered the last 5 years, and 4 categories: low risk, medium risk, higher risk and highest risk.
We’ll cover the results below, but overall, Nutmeg didn’t perform well. In all but the highest risk level they performed worse than the industry average, and across all risk categories, significantly worse than Moneyfarm (who wins every category).
Here’s the results, and for a full review, check out the best performing Stocks and Shares ISAs.
Lower risk performance review
| Nutmeg | 1.00% |
| Moneyfarm | 8.30% |
| Wealthify | 2.70% |
| Industry average | 6.30% |
Medium risk performance review
| Nutmeg | 5.70% |
| Moneyfarm | 11.50% |
| Wealthify | 7.70% |
| Industry average | 9.70% |
Higher risk performance review
| Nutmeg | 14.40% |
| Moneyfarm | 21.00% |
| Wealthify | 13.50% |
| Industry average | 16.00% |
Highest risk performance review
| Nutmeg | 23.30% |
| Moneyfarm | 26.70% |
| Wealthify | 17.80% |
| Industry average | 20.70% |
It’s worth noting investing is very difficult, that’s why we recommend using expert managed investment platforms. They’re here to use tried and tested investment strategies to grow your money over the long term. And Nutmeg does that.
However, as a trend, it does appear that other providers are growing their customer’s money a bit more (over the last 5 years). And over the long-term those small differences can add up to a big difference in your total balance.
Nutmeg fees
As Nutmeg is built on exchange-traded funds (ETFs) that are relatively cheap fees wise, it means Nutmeg can offer you low fees too.
However, you’ll also be paying a fee on the investment funds your money is in (ETFs), and what’s known as market spread, which is a cost to buy and sell these funds.
So, add all the fees together and that’s what you’ll ultimately pay. Just over 1% per year. Which is reasonable.
If you invested with an investment advisor (a real person) instead of Nutmeg, you’d be looking considerably more, as much as 5% on your initial investment and then ongoing management fees.
Here’s a full breakdown of the fees for each investment style:
Fully Managed
Nutmeg fee: 0.75% up to 100k, 0.35% on the total after this.
Fund cost: 0.20%
Market spread: 0.07%
Smart Alpha
Nutmeg fee: 0.75% up to 100k, 0.35% on the total after this.
Fund cost: 0.25%
Market spread: 0.07%
Fixed Allocation
Nutmeg fee: 0.45% up to 100k, 0.25% on the total after this.
Fund cost: 0.22%
Market spread: 0.07%
Socially Responsible
Nutmeg fee: 0.75% up to 100k, 0.35% on the total after this.
Fund cost: 0.28%
Market spread: 0.07%
However, in comparison with other digital investment providers, Nutmeg is one of the most expensive.
With Moneyfarm, fees start the same at 0.75% per year, but scale down as you save more, for instance if you have £20,000 saved, the fee is 0.65%, and this is applied to your whole balance. The fees also go as low as 0.35%.
And with Wealthify, the annual management fee is 0.60%, however much you have invested.
With Nutmeg, you have to save £100,000 before fees reduce, and they only reduce on the amount above that.
We go into this in a lot more detail in our review of Moneyfarm vs Nutmeg.
And with PensionBee, who just do pensions. The total fee is 0.75% (and reduces on larger balances), which includes all the investment fees too. Which is a very good deal. You can learn more about them with our PensionBee review, or check out the PensionBee website¹.
Is Nutmeg safe?
Yep! It’s perfectly safe to use Nutmeg. They are authorised by the Financial Conduct Authority (FCA), which means they’ve been approved and trusted to look after your money.
Your money is also protected by the Financial Services Compensation Scheme (FSCS). This means that should anything bad happen to Nutmeg, such as going out of business. You’ll get up to £85,000 back.
However, your money is actually held in the investments themselves, and these have extra protection. They’re held with the bank, J.P. Morgan, and are all in your name, and can only be returned back to you.
Nutmeg pros and cons
Here’s a recap of Nutmeg, and the pros and cons:
Pros
- Easy to use
- Simple investment options
- Experts handle the investments
Cons
- Poor investment record
- Not the cheapest
Nutmeg customer reviews
Nutmeg is rated 3.8 out of 5 on Trustpilot, the popular reviews website, from over 1,450 reviews. That’s not great compared to other companies. There’s a lot of complaints about customer service and the poor track record of investing. However the app itself is good, and gets good reviews.
Our thoughts
What we really like about Nutmeg is it gives everybody the chance to invest their money, andbuild up their savings easily, simply and automatically. And everybody should!
But more than just the ability to invest, it has a great phone app and website to easily manage your accounts – providing easy access, and transparency to see how your money is performing over time.
The fees are reasonable, and transparent. Although there are cheaper options, such as Moneyfarm, Wealthify and PensionBee (for pensions). In fact, Nutmeg is one of the most expensive digital wealth managers you’ll find.
Overall, we’re giving Nutmeg 3 stars. It’s good, but ultimately there’s better options out there. Ones that have a better track record of investing, have cheaper fees, easier to use, and have better socially responsible investment options. Plus, experts on hand to guide you through the process and answer any questions you might have.
We recommend checking out Moneyfarm¹ for investing and PensionBee¹ for pensions – they’re all of the above, and really great options.
