At Nutmeg, we’re always working hard to make sure we keep underlying investment costs as low as we can. That’s why we’re constantly engaging with ETF (exchange-traded fund) providers and undertaking our due diligence on a wide range of funds. We want your investments to be best in class.
This has led us to make some changes to the funds you’re invested in. We wanted to explain what we’ve done and why.
What we’ve done and why
We’ve switched holdings in two areas.
- In European (EMU) equities with a currency hedge, we’ve switched to a new ETF. The new underlying ETF cost is 0.12% per year, compared to the 0.25% per year it had been costing up to now.
- In US equities with a currency hedge, we’re going to continue tracking the S&P 500, but we’ve switched to a new ETF here too. The underlying cost for this new ETF is 0.10% per year, compared to the 0.20% per year we’d been paying up to now.
Switching these holdings meant initiating one of the biggest trades in our history, moving £370m of customers’ money in total. But don’t worry, we don’t charge you a Nutmeg fee for trading.
We’re also benefitting from a cost reduction offered by one of our existing ETF providers.
- In emerging market equities (EMIM) across large, mid, and small companies, the cost will now be 0.18% per year, down from 0.25% per year previously.
What these changes mean for you
In all, we estimate that these changes will save our customers around £500,000 in the next 12 months. But the benefits will continue to be felt for years to come, as the savings can compound along with your investments.
It’s important to be aware that these costs are not charged directly to you, but instead are taken from the performance of each ETF on a daily basis. This is why we call them underlying fund costs, as they’re settled before any returns are paid to you.
Nutmeg’s open approach to selecting funds means we can always put customers first. We’re able to use our customers’ collective buying power to get the best terms for you. Our investment team work hard to ensure your money is invested at the best possible terms, and because we’re not tied to one provider, we haven’t been afraid of shopping around for the best deal. The chart below shows how our allocation to ETF providers has changed since October 20121.
This ongoing commitment to you means we’ll continue to review every aspect of the investment service we offer to make sure it’s as efficient as it can be. So, there are likely to be more changes in the future, and we’ll keep you up to date by email and on this blog.
Learn more about how our costs and charges work.
Risk warning
As with all investing, your capital is at risk. The value of your portfolio with Nutmeg can go down as well as up and you may get back less than you invest.
Sources
- Nutmeg portfolio holdings data since inception, measured at the end of each full calendar month, except for the month of July 2018 which was taken on 17th July 2018.
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Shaun Port
Shaun is the chief investment officer at Nutmeg. He has over 25 years’ experience developing and implementing investment strategies for clients ranging from central banks to pension schemes to charities and private individuals. Shaun holds a degree in Mathematical Economics from the University of Birmingham and is a Chartered Alternative Investment Analyst. He can be found tweeting @ShaunPort.Other posts by Shaun Port