Nutmeg, Vanguard Lifestrategy or Ready-Made Portfolio?

I'm debating whether to invest in Nutmeg or VLS - I know they are different products and not directly comparable, but I wanted to understand the difference in charges between the two if I were to invest £500 / month for the foreseeable future.

I currently use IWeb for my S&S ISA, no admin charges, flat £5 commission per trade. So if I invest £500 / month in VLS there, I'm effectively paying 1% fee each time, in addition to the Vanguard 0.22 % ongoing charge for the fund.

On the other hand, if I put that money in Nutmeg's "Fixed allocation portfolio" I would have an ongoing charge of 0.45% but no commission charges (if I understood correctly) when I deposit the money each month.

I realise that £60 / year for investing in VLS is not that much in the grand scheme of things, but I want to make sure I do a fair comparison of charges over a long period of time. Am I right in thinking that - purely for the purpose of comparing charges - I would be better off investing in Nutmeg as long as the annual £60 commission charges from IWeb are HIGHER than 0.23% (=0.45-0.22) of my total investment value? So the break point would happen in 4-5 years time, assuming I continue to invest £500 / month... Or am I missing something else?

Of course I could invest in VLS on a quarterly basis and bring my trading commission down to £20 / year, but I would prefer the monthly investment option. Any ideas for bringing down costs for VLS investment? Suggestions for alternative platforms better suited for this purpose?

Again, I know VLS and Nutmeg are two very different investment vehicles and are NOT equivalent to one another in terms of fund make up, exposure, balancing etc... This is just a question about comparing ongoing charges over the long term when choosing to invest in one over the other.

Thanks!

The performance difference between VLS and Nutmeg's fixed allocation ETF portfolios is negligible.

Nutmeg would cost 0.63% (0.45% platform + 0.17% ETF cost) whereas investing in VLS with Vanguard Investor costs 0.37% (0.15% platform + 0.22% fund cost) so 0.25% cheaper and you are with a more secure provider.

If you have an accumulated historic ISA balance on iWeb you could stick it in VLS this tax year and then start a new S&S ISA with Vanguard Investor next tax year for future contributions?

Then every 3 years you could partially transfer some of your Vanguard Investor ISA to your iWeb ISA (to save the 0.15% platform cost which on £18k would otherwise be £27 per year) and pay for a single £5 trade to invest on iWeb?

That way I doubt either company would make a profit from having you as a customer!

Alex

GMNN wrote: »

Thank you to both for the advice. I didn't realise the ETF cost in Nutmeg would be additional, I thought it was already rolled into their 0.45 % ongoing charge. Definitely leaning towards VLS then..

Indeed I have already invested in my iWeb S&S ISA this tax year so I will stick with it for now, then will consider other options in April.

Yup £500 per month in a Vanguard Investor ISA next tax year would cost you around 7/12ths of 0.15% X £6000 so around £5.25 total platform fee compared to £60 of trades on iWeb.

Alex