Nutmeg - Investment Management - Thoughts?

masonic

Sobryma wrote: »

I have tried to do a comparison to the Bestinvest Managed Portfolio service I use. Its not always just charges though - Nutmeg appears to have similar performance for Portfolio 6 but I think the risk level and volatility is higher than Bestinvest portfolio (which is FE risk 44).

Well yes, if you start venturing away from index trackers into managed funds (which the Bestinvest service uses), then portfolios with the same top level make-up can be quite different in terms of risk through stock selection. It might even be the case that a lower risk Nutmeg portfolio is closer in asset allocation to your Bestinvest portfolio.

If you look at the graph in the first link I posted above, you'll see they've conveniently tabulated the Vanguard FTSE 100 volatility as 14.1% vs their mid-risk portfolio volatility of 8.9%. Since the FE risk score is essentially the volatility vs. the FTSE 100, you could estimate their FE risk score as the ratio of those two numbers (approx. 63). Now they don't actually state which portfolio this is, but given that it is 55% equities and 45% bonds, I'd wager it is either portfolio 5 or 6. If portfolio 5, then the FE risk of 6 will be even higher. Either way, the Bestinvest portfolio looks lower risk.

moneyfoolish

I used Nutmeg for the first time for my S&S ISA in which I invested £5760 on January 8th, 2014. Now, on February 26th, 2015 it is worth £6295, an increase of 8.5%. I split my investment over 4 different levels.
Level 4: £1000 has gone to £1070 an increase of 6.55%.
Level 6: £1760 has gone to £1900 an increase of 7.35%.
Level 8: £1000 has gone to £1096 an increase of 8.76%.
Level 10: £2000 has gone to £2229 an increase of 10.29%.

On October, 29th the value was still £5760 so all of the increase has been in the last 4 months. From earlier posts, it seems as though I could have done better in some of the Vanguard LS funds but I find Nutmeg is very easy to use and I have a relatively small amount of money invested. I'm not sure if I will add to it this year, invest in another S&S ISA or just accept the abysmal cash ISA rates currently on offer.

RichardS

I'm about 10 months in and am 6.96% up - I have around £10K at Level 4, £7K at Level 6 and £3K at Level 8. Like moneyfoolish what I like about Nutmeg is the simplicity and visibility. I use their mobile app all the time and like to see how I am doing - it's made the whole investment thing quite fun for me (I'm a total newbie). I never risked anything at Level 10 but seeing those figures I wish I had :-)

bowlhead99

RichardS wrote: »

I never risked anything at Level 10 but seeing those figures I wish I had :-)

Don't worry, you won't wish you had when they move at the same rate in the opposite direction. Nutmeg has only existed since we started the last 'bull market' boom period after the market bottom in 2009.

moneyfoolish

bowlhead99 wrote: »

Don't worry, you won't wish you had when they move at the same rate in the opposite direction. Nutmeg has only existed since we started the last 'bull market' boom period after the market bottom in 2009.

I agree. Level 10 is 100% equities and certainly moves down quite quickly when the market falls! I don't suppose it's much different for the Vanguard LS 100 Fund, though or any other fund that's 100% equities. I think if I ever decide to put any more money in it will be at Level 4 or 6. If anybody knows of an equity fund that goes up quickly when the market is booming and doesn't go down quickly when the market is falling, I'd love to hear about it!

DesG

moneyfoolish wrote: »

If anybody knows of an equity fund that goes up quickly when the market is booming and doesn't go down quickly when the market is falling, I'd love to hear about it!

Wouldn't we all

Aegis

moneyfoolish wrote: »

I used Nutmeg for the first time for my S&S ISA in which I invested £5760 on January 8th, 2014. Now, on February 26th, 2015 it is worth £6295, an increase of 8.5%. I split my investment over 4 different levels.
Level 4: £1000 has gone to £1070 an increase of 6.55%.
Level 6: £1760 has gone to £1900 an increase of 7.35%.
Level 8: £1000 has gone to £1096 an increase of 8.76%.
Level 10: £2000 has gone to £2229 an increase of 10.29%.

On October, 29th the value was still £5760 so all of the increase has been in the last 4 months. From earlier posts, it seems as though I could have done better in some of the Vanguard LS funds but I find Nutmeg is very easy to use and I have a relatively small amount of money invested. I'm not sure if I will add to it this year, invest in another S&S ISA or just accept the abysmal cash ISA rates currently on offer.

Just out of interest, the Vanguard Lifestrategy funds have done the following over the same timeframe (admittedly with quite a strong US bias, but some prefer to limit the effect of the home bias anyway):

20% Equity - 11.86%
40% Equity - 12.80%
60% Equity - 13.66%
80% Equity - 14.40%
100% Equity - 15.22%

The L&G Multi Index Funds have done this with a lesser focus on the US and more flexibility to adjust asset allocation away from fixed percentages:

Level 3 - 11.33%
Level 4 - 12.44%
Level 5 - 12.45%
Level 6 - 12.31%
Level 7 - 12.42%

The BlackRock Consensus funds have done as follows:

35% Maximum Equity - 9.82%
60% Maximum Equity - 9.27%
70% Maximum Equity - 9.46%
85% Maximum Equity - 10.61%
100% Maximum Equity - 13.27%

Nutmeg's not doing too well compared with a number of unit trusts designed to achieve the same basic results. Admittedly there would be some platform costs associated with the above funds, but those are likely to come in at around 0.3-0.4% at most, which would still leave the funds outperforming Nutmeg regardless of which range you went with and almost irrespective of risk profile (the lower risk funds listed above appear to be outperforming the best performing Nutmeg portfolio for the most part).

It seems to have a loyal following and a great interface, but the performance really doesn't appear to be that great so far.

moneyfoolish

Aegis wrote: »

Just out of interest, the Vanguard Lifestrategy funds have done the following over the same timeframe (admittedly with quite a strong US bias, but some prefer to limit the effect of the home bias anyway):

20% Equity - 11.86%
40% Equity - 12.80%
60% Equity - 13.66%
80% Equity - 14.40%
100% Equity - 15.22%

The L&G Multi Index Funds have done this with a lesser focus on the US and more flexibility to adjust asset allocation away from fixed percentages:

Level 3 - 11.33%
Level 4 - 12.44%
Level 5 - 12.45%
Level 6 - 12.31%
Level 7 - 12.42%

The BlackRock Consensus funds have done as follows:

35% Maximum Equity - 9.82%
60% Maximum Equity - 9.27%
70% Maximum Equity - 9.46%
85% Maximum Equity - 10.61%
100% Maximum Equity - 13.27%

Nutmeg's not doing too well compared with a number of unit trusts designed to achieve the same basic results. Admittedly there would be some platform costs associated with the above funds, but those are likely to come in at around 0.3-0.4% at most, which would still leave the funds outperforming Nutmeg regardless of which range you went with and almost irrespective of risk profile (the lower risk funds listed above appear to be outperforming the best performing Nutmeg portfolio for the most part).

It seems to have a loyal following and a great interface, but the performance really doesn't appear to be that great so far.

Thanks for the information.
I like the flexibility of Nutmeg where I can buy, sell, add money and switch between funds so easily via my laptop but it certainly is lagging on those figures! Do you know which the funds you quoted has done better in a falling market?

masonic

moneyfoolish wrote: »

Thanks for the information.
I like the flexibility of Nutmeg where I can buy, sell, add money and switch between funds so easily via my laptop but it certainly is lagging on those figures! Do you know which the funds you quoted has done better in a falling market?

Most of them haven't been around long enough to be judged in a falling market. The short-term volatility can be used as an indicator to how funds might perform relative to one another in a falling market, but is far from perfect. The FE Risk scores of the mid-risk (~60% equities) funds might therefore be used to compare them:

Lower number indicates better performance in falling markets...
Nutmeg 5 = approx. 63 (determined in post above)
L&G Multi-index 5 = 56
Vanguard 60% = 48
BlackRock Consensus 60 = 42

Sobryma

masonic wrote: »

Well yes, if you start venturing away from index trackers into managed funds (which the Bestinvest service uses), then portfolios with the same top level make-up can be quite different in terms of risk through stock selection. It might even be the case that a lower risk Nutmeg portfolio is closer in asset allocation to your Bestinvest portfolio.

If you look at the graph in the first link I posted above, you'll see they've conveniently tabulated the Vanguard FTSE 100 volatility as 14.1% vs their mid-risk portfolio volatility of 8.9%. Since the FE risk score is essentially the volatility vs. the FTSE 100, you could estimate their FE risk score as the ratio of those two numbers (approx. 63). Now they don't actually state which portfolio this is, but given that it is 55% equities and 45% bonds, I'd wager it is either portfolio 5 or 6. If portfolio 5, then the FE risk of 6 will be even higher. Either way, the Bestinvest portfolio looks lower risk.

Yes that makes sense and helps. I've asked them for monthly performance figures and ARC comparisons I suspect a portfolio 4 might closer to the Bestinvest funds - which historically admittedly have done quite well against riskier ARC benchmarks.

I have work pension to Bestinvest which is a bit more high octane and lower cost (even with an IFA) but I think Nutmeg is worth exploring,