Deal of the week: Pay 0% investment management fees with Nutmeg

25 May 2018

Investors looking to save on management fees might want to consider this deal from Nutmeg.

What’s the deal exactly?

Sign up for a Stocks and Shares Isa, general investing account or personal pension with robo-investing provider Nutmeg and pay no fees until the end of this tax year (5 April 2019).

Nutmeg is a robo-investment management service that offers two kinds of portfolio. One is a fully managed portfolio and the other the fixed allocation portfolio. The typical fee for fully managed portfolio is 0.75% up to £100,000 and 0.35% thereafter. For the fixed allocation portfolio, the fees are lower at 0.45% up to £100,000 and 0.25% for larger investments.

The fully managed portfolio is effectively an actively managed portfolio that is invested in exchange-traded funds (ETFs) selected by Nutmeg portfolio managers. Currently, the portfolio has returned 24.9% over five years, annualised at 4.6%.

The fixed allocation portfolio operates more like a tracker with varying outcomes. You can set your own risk allocation from cautious through to adventurous. This will alter the make-up of your portfolio, with safer options containing many more bonds, while the adventurous portfolio is almost exclusively equities. 

Why should I care?

Investment management fees can cut into your returns and reduce the overall outcome of your investment.

For example, if you were to invest £25,000 in Nutmeg’s fully managed portfolios without the discount, the fees would cost you £162 until the end of the year. Put away £50,000 and without the discount you would pay £323.55 in management fees.

In the fixed allocation portfolio, you’ll save £98.55 in fees for £25,00 invested, or £194.40 in fees for £50,000.

What’s the catch?

You’ll have to be a new customer who has never invested with Nutmeg. Unfortunately, the offer doesn’t apply to Nutmeg’s Lifetime Isa (Lisa) account.

The offer closes on 31 May 2018 so you’ll need to act fast. The 0% fee offer will apply on your investment until 23:59 on 5 April 2019.

To guarantee you receive the promotional rate, you need to deposit at least £500 plus £100 a month ongoing contribution, or a minimum deposit of £5,000.

To open a pension with Nutmeg, you’ll have to commit at least £5,000. If the criteria are not met, it will withdraw the no-fee promotion.

Also note that this offer only includes management fees. Investment fund costs which Nutmeg say are 0.21% on average in their portfolios, still apply.

What are the other options?

There are many ways you can invest your money, and different platforms offer different fees structures depending on how much and how frequently you want to invest. Check our guide to the best platforms for beginner investors for more on this.

Where can I find out more?

To take up this offer, you’ll need to follow this link to the Nutmeg website and enter your email address. The page also contains more details on how the deal works.

If you want to find out more about robo-investing before taking up this deal from Nutmeg, check our guide to how the sector works.

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