Nutmeg offers portfolio management service free for rest of 2014
Invest £15,000 or more with Nutmeg and you won't have to pay a penny in management charges until 2015.
Online investment management service Nutmeg has announced that it’s waiving its management fee until the end of the year for new customers investing £15,000 or more this month.
This offer comes a couple of weeks before the annual ISA limit increases to £15,000. All money invested will be held in a standard Nutmeg account before being moved into an ISA on 1st July.
You can transfer past years’ ISAs over too.
Compare Nutmeg to other stocks & shares ISA providers
How Nutmeg works
Nutmeg offers what it calls “expert portfolio management”. In a nutshell, it builds up an investment portfolio for you based on how much you have to invest, your financial goals, your attitude to risk and how long you want to invest.
The service will regularly review your investments and rebalance your portfolio to keep in line with your investment goals.
It invests predominately in exchange traded funds (ETFs), which are a lower-cost way of getting exposure to different financial markets and assets.
Investment fees
While the portfolio management fee may be free for the rest of this year, you’ll still have to pay fees for investing in the funds in your portfolio. Nutmeg says these average 0.28%, which is pretty competitive. There's also the bid-offer spread, or the difference between the selling price and the buying price, which Nutmeg says averages around 0.17%
When the free period is over
Once the free period is over on 31st December, you can withdraw your money and close your Nutmeg account without any further charges.
Or you can keep your investment with Nutmeg. It’s worth noting if you have a smaller portfolio then Nutmeg is fairly expensive, particularly given it’s investing mainly in ETFs.
That’s because Nutmeg’s annual fee is tiered based on the size of your portfolio.
|
Size of portfolio |
Annual management charge |
|
£1,000-£24,999 |
1% |
|
£25,000-£49,999 |
0.9% |
|
£50,000-£99,999 |
0.75% |
|
£100,000-£249,999 |
0.6% |
|
£250,000-£499,999 |
0.5% |
|
£500,000+ |
0.3% |
As you can see, the more you have invested the more the fee decreases.
How Nutmeg compares
Here’s a cost comparison with some other well-known investment platforms.
|
Platform |
Annual management charge |
|
Charles Stanley Direct |
0.25% (up to £500,000) |
|
0.35% |
|
|
0.35% |
|
|
0.40% |
|
|
0.45% (up to £250,000; 0.25% between £250,000 and £1 million) |
Of course, you still have to pay fund management charges elsewhere too. Even so, you could only be paying around 0.5-0.6% at some of the cheaper investment platforms.
Having said that, the Nutmeg service means you don’t have to pick the investments yourself.
And, while it’s fairly young still, returns so far are above or around the market average in all cases. Of course, past performance is no guide to future returns though.
See for yourself: compare Nutmeg to other stocks & shares ISA providers
More on investing:
Beginner's guide to stocks & shares ISAs
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