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Nutmeg

Nutmeg

INTRODUCING NUTMEG 

In a fledgling industry where longevity is often measured in months, Nutmeg could be considered positively venerable having been around since it was established back in April 2011.

Nutmeg was really trailblazing at the time and it will have been the catalyst for many of the online investment managers currently coming to market.

Nutmeg makes bold, visionary statements about 'reinventing' and 'demystifying' investment with the ambition to 'empower a nation of investing'; Nutmeg embraces technology to target outstanding investment performance whilst providing a transparent and straightforward customer experience.

As the prime mover in the automated investment space, Nutmeg initially attracted some high profile investors including Michael Spencer, Charles Dunstone, Nigel Wray and Schroders although its losses continued to mount.

However, in a display of unswerving self-belief Nutmeg continued to invest in developing its core proposition, even trimming its charges along the way, and with ISA and Personal Pensions accounts and fully stocked customer services and investment management teams now has a platform that has something for everyone; as a result it has just secured £30 million of additional funding from  Hong Kong based Convoy Group - the largest ever raise for a digital wealth manager in Europe, and the largest fintech fundraise since the UK voted to leave the EU.

Nutmeg now has 20,000 customers and has topped half a billion pounds of assets under management; it plans to use the latest investment to further develop its proposition and accelerate growth throughout the UK. 

 

  • Sophisticated digital discretionary investment management

  • Portfolios of ETFs based on investor's attitude to risk

  • Regular rebalancing by human investment committee

  • 10 portfolios from 'cautious' to 'aggressive' 

  • General Investment, ISA and Pension accounts

  • Separate investment pots with individual objectives

  • Fully managed 0.75% < £100k; 0.35% beyond

  • Fixed portfolios 0.45% < £100k; 0.25% beyond

  • Minimum investment £500 per pot; £5,000 for pension

  • 24/7/365 access to performance and portfolio data

NUTMEG: NO NONSENSE INVESTING

Nutmeg unashamedly set out to be a disruptive force in the wealth management space - seeking to 'reinvent' and 'demystify' an industry that it perceived to be opaque and self-serving.

In seeking to democratise investments, Nutmeg aims to deliver 'smart investing for everyone'.

Because it has been around for a while, and its marketing efforts have been extensive, Nutmeg's brand feels comfortable and familiar, albeit that the market for digital discretionary investment management remains in its infancy in the UK.nutmeg-mobile

A challenge for all of the robo-advisers is to treat investing as something that is serious, and capable of making a profound difference to those that embrace it over a long time line, whilst debunking some of the jargon and mystery that has traditionally surrounded it, and reaching out to a new generation of investors.

The recurring message on Nutmeg's site is simplicity - 'a fully managed portfolio from the comfort of your own home', automated but with expert investment management, and inexpensive - 'the more you invest, the less you pay'.

Its site is engaging and intuitive and combines simplicity with a more serious side - it runs ten risk adjusted portfolios of ETFs ranging from 'cautious' to 'aggressive' and the would-be investor is urged to 'take 10 minutes to change your life' by building a test portfolio.

Nutmeg seeks to entice savers by including the statistic that over a 114 time horizon, UK stocks have outperformed inflation by an average of 4.9% compared to 0.9% in cash; its message is clear.

Based upon the inputs in its application process, Nutmeg serves up financial advice and delivers discretionary investment management; its portfolios are assessed according to prevailing market conditions and regularly rebalanced to ensure that they remain true to their intended objectives and risk profile.

Nutmeg is prolific in the amount of content it produces, both germane to its proposition and around wider market and investment issues, and its monthly rebalancing is always explained in context.

Nutmeg's challenges have been well documented in the press, spun according to the author's perspective; what is clear is that the company has spent a great deal of money in building out its product range and ensuring that it has sufficient technical and human infrastructure to support it.

Its most recent investment will allow the company to maintain its growth and its site emphasises the fact that Nutmeg wants it to be as simple as possible for those with products elsewhere - particularly ISAs and SIPPs - to transfer in; a JuniorISA is also believed to be in development - maybe an ideal vehicle to save for tuition fees - 'from the nutmeg groweth the mighty......' etc.

Each of the robos make good use of technology, not only to take full advantage of efficiencies in terms of researching and maintaining portfolios, but also in terms of delivering 24/7/365 access to valuations and administrative functions via a wide range of devices.

Nutmeg was voted Best Online Stocks & Shares ISA provider 2016 and 2015 at the Your Money Awards and Best Wealth Management Platform, Online Personal Wealth Awards.

n     Simple - automated discretionary investment management
n     Scope - ten risk adjusted investment portfolios
n     Expert - professional investment management, simplified
n     Low fees - 0.75% potentially falling to 0.25%
n     Flexible - General Investment Account, ISA, Pension
n     Secure - encryped, secure comms; State Street bank
n     Innovative - unlimited 'pots' for each of your goals
n     Access - invest from just £500 per pot
n     Technology - 24/7/365 computer, tablet or mobile
n     Support - large customer services resource

STARTING WITH NUTMEG
Nutmeg makes much of the fact that it is possible to set up an 'intelligent investment portolio' in less than ten minutes; 'a professional portfolio, managed by our team of experts'. Nutmeg's three stage process allows you to set your goals and decide upon the level of investment risk you are comfortable with; its platform then allocates you one of its ten risk-managed portfolios and you are then granted 24/7/365 to view your investments or withdraw your money at any time. Because of its relatively broad product range and portfolio management options, Nutmeg's sign up process can require a little more thinking about than others in its peer group as, for example, the applicant sets individual financial goals - e.g. tuition fees - and applies a risk profile only to that investment pot. Management fees are applied to the total value of assets under management regardless of the number of pots that are in operation. Pots can be established with an investment from just £500, but those containing less than £5,000 require a regular monthly investment of not less than £100 to be established; Nutmeg's Personal Pension account has a minimum requirement of £5,000 invested. The mixture and weighting of different investments and asset classes within your portfolio will change over time as their respective risk changes and your allocation is dynamically adjusted by Nutmeg's investment team to stay in line with your risk category.   Step 1 - Getting Started - select an account type - General/ISA/Pension   nutmeg-app-1   Step 2 - Set an investment objective and a target amount nutmeg-app-2   Step 3 - Select amount to invest, risk profile and time horizon  

nutmeg-app-3

A range of outcomes are presented and it is possible to change parameters to see the effect it has on outcomes. It is then possible to see how this portfolio would be constructed, what investments are included and what its historical performance would have delivered.

Step 4 - Open a new ISA or transfer in an existing plan?

 nutmeg-app-4

Step 5 - State your investment experience and emotional response to potential loss and a range of other scenarios

nutmeg-app5

Step 6 - Your risk profile - as calculated according to these questions; accept it as accurate or retake the test

nutmeg-app-6

Step 7 - You are then presented with a range of appropriate risk levels based on your risk tolerance

nutmeg-app-7

Step 8 - Confirm that you can make the proposed investments whilst still having access to emergency funds; accept the potential outcomes of your investment and the potential for loss

nutmeg-app-8

Step 9 - Enter personal details and establish banking relationship

nutmeg-app-9

NUTMEG IN ACTION

In contrast to some of its advertising, which in its attempt to reach out to a whole new audience of investors can sometimes appear a little twee, Nutmeg feels like a substantial proposition.

It clearly benefits from having been around a while and there is a great deal of support and information peppered around its site as well as copious reminders that online chat and telephone support is there should you need it.

Nutmeg offers a wide choice in terms of account types - General Investment, ISA and Personal Pension, and markets itself as the choice for those looking to consolidate investments and accounts they may have elsewhere; at a time of historically low interest rates, some may be tempted to transfer in a poorly performing Cash ISA and let Nutmeg's investment team aim for better returns in the stockmarket.

Nutmeg attempts to engage with a whole range of different types of investor, from millennials looking to embark upon a long-term investment regime, through to experienced investors well versed in the underlying assets held within a portfolio and seeking to keep costs down.

Nutmeg does well to deliver a platform that is 'seamless, straightforward and transparent' enough to attract newbie investors whilst serving up enough pithy data and information to satisfy those with investment experience.

When setting up an account it is possible to drill down into the investment portfolio, the investments that would be held therein and see how it would have performed historically.

The first projection shows the likelihood that the investment objective will be achieved based upon 'good, expected, poor or very poor' portfolio performance.

 

nutmeg-projection

It is then possible to see the breakdown of the proposed portfolio, filtered by asset type, geography or sector:

nutmeg-portfolio

The portfolio can then be viewed in the context of how it would have performed in each of the previous twenty years:

nutmeg-historical

Because it has been around for five years, Nutmeg is happy to serve up not only comparisons with traditional IFAs, DIY platforms and wealth managers to confirm its low cost credentials, it is also able to show the relative performance of its ten risk-adjusted portfolios, which is a great benefit to those that want to dig around under the bonnet.

nutmeg-performance

Nutmeg delivers a view of the annualised performance of each of the ten risk managed portfolios from inception in September 2012; it also allows comparison with the performance of its competitor products with a similar risk profile.

This could be very useful for those that have signed up to Nutmeg, but are considering adjusting their risk profile at some point in the future; it could also be useful when considering different risk profiles for different investment pots.

Nutmeg makes much of the human expertise that is used to optimise its portfolios according to changing market conditions and a video report puts the changes that have been made in context.

If fact sheets and supporting documentation are your thing you'll struggle to find a more comprehensive compendium of information in the automated advice space.

Nutmeg also serves up plenty of content about the broader investment and economic environment in an attempt to be a destination for those that want to feel some connection with their investments; those that want minimal involvement are well served with simple apps that allow any time access to valuations, administration and simple withdrawals.

 

MUCKLER'S VIEW

Muckler supports any initiative that seeks to encourage long term savings and investment and doffs his titfer to Nutmeg for having sailed off into uncharted waters five years ago.

Without sounding trite, Nutmeg has stuck to its founding principles of demystifying investment, delivering a simple, transparent investment platform and embracing technology to improve investment returns whilst driving down costs.

Nutmeg has attracted, and famously spent, substantial amounts of investment and even though that has not yet filtered through to its bottom line, its 20,000 customers and £500 m under management must put it at the top of an admittedly as yet relatively small heap in the UK.

Because of this investment, and the five years it has been around, Nutmeg probably has the broadest offering in the market and has developed a significant support infrastructure; it has recently been exploring the possibility of an adviser-based proposition which could be delivered once the final recommendations of FAMR are delivered upon.

Nutmeg is a good place to consolidate a range of investments across different account types, with pots at varying risk, whilst paying just a single fee that reduces as the total value of the investment increases.

We like the fact that it is possible to have only a fleeting relationship with Nutmeg or drill down into the nuts and bolts of its investment process as is your wont.

Because its portfolios have been in operation since December 2012 it is possible to accurately compare the performance of each of its ten portfolios; Nutmeg does not shy away from comparing its performance with those of a competitor with a similar risk profile, and gladly serves up a comparison of its fees set against either DIY platforms, IFAs or wealth managers.

With a large number of digital wealth managers either new to market or in development, there will a lot of people hoping that Nutmeg is able to deliver upon its objective to democratise investment and reach out and engage with those new to savings and investment.

 

Muckler thinks Nutmeg is good for:

 

nutmeg-m     Simple discretionary wealth management
nutmeg-m     Those new to savings and investment
nutmeg-m     Existing investors looking to keep costs low
nutmeg-m     Those looking to consolidate their investments
nutmeg-m     Establishing a range of pots with different risks
nutmeg-m     Expertly managed, risk-based investments
nutmeg-m     Those wanting to learn more about investing