|Fees: 0.45% Fully managed portfolio is 0.75%
|500 Min. Account Size
Nutmeg is the United Kingdom’s largest robo advisor with assets under management of over £600 million.
Nick Hungerford, the co-founder of Nutmeg, started the robo advisor because he was frustrated with the lack of transparency in the investment management industry, as well as how difficult it was for regular investors to get access to world class professional advice.
In doing that, Nick and his partners have created an online robo advisor service that breaks down the walls that traditionally existed with good investment advice and made it accessible at a low cost for all investors.
Here are the following details about Nutmeg that potential customers should be aware:
Some robo advisors do not require any minimum deposit to sign up for their services. However, Nutmeg does require a £500 minimum investment to get started. In addition, if your initial deposit is less that £5000, then new clients are required to set up a monthly automatic investment of £100.
They require these initial investments in order to build out a properly diversified portfolio. With anything less than £5000, the portfolios can be too concentrated so they want to encourage long term saving by requiring these initial investment amounts.
Nutmeg uses exchange traded funds (ETFs) for the various assets that customer portfolios are invested in. By using ETFs, clients are getting fully diversified investments at a low cost.
In order to build a customer’s portfolio, Nutmeg first gets to know the risk profile and time horizon for the customer. With that information, the right portfolio is built using ETFs across multiple asset types, countries, and industry sectors. This spreads the risk out across multiple assets while increasing the opportunity for higher returns.
As a final and ongoing step, the portfolio is monitored periodically and rebalanced as the asset allocation changes due to how well the market does or doesn’t do.
Nutmeg also offers two types of services for clients. The first is the “Fully Managed Portfolio” which is continually monitored by a team of advisors with strategic opportunities implemented based on the client’s needs. The second is the “Fixed Allocation Portfolio” which does not provide that strategic advice on an ongoing basis.
No matter which service is chosen, a Nutmeg asset allocation may look like the following screenshots from their website. Note that we have provided both the asset type as well as geographic allocation:
Nutmeg charges low fees, especially when compared to traditional investment services. Here is a table that summarizes the fee structure:
In addition to these fees, the average exchange traded fund fee that will be paid is approximately 0.19%. This fee is on top of the fees changed by Nutmeg, however it will be transparent to investors as it is taken directly by the fund.
The more account types available to investors, the more options there are to utilise the professional services offered by a robo advisor. In the case of Nutmeg, they offer the following account types:
The process to signup with Nutmeg can be done completely online. The process is very simple and only takes a few minutes to get started.
If you still have questions after going through the site, they have a phone number you can use to talk to a customer service agent who will be able to help you with any specific questions you may have. In addition, they have prepared a video that walks customers through the required steps to open an account and get started with Nutmeg.
If you are looking for a solid robo advisor, and are a UK resident, then Nutmeg is one service you should strongly consider due to its low fees and portfolio management approach.