On the subject of distribution of income from the assets Nutmeg invests in, there are two main classifications to be aware of: accumulation and distribution funds.
Exchange Traded Funds (ETF) aim to track a particular index as closely as possible, e.g. Vanguard FTSE 100 ETF (VUKE) aims to track the share prices of the UK's largest 100 companies.
Many ETFs are not built to provide income, though in the process of investing in a range of companies there are companies that pay dividends or bond interest. Depending on the ETF, this income is either distributed straight to the customer as cash in their Nutmeg portfolio or re-invested. When income is re-invested in the ETF without being paid out to the customer, this is called an accumulation fund.
Conversely, income that arrives in customer portfolios from a distribution fund will sit as a cash holding until it is re-invested during our regular re-balancing of portfolios. Income is not paid out to customers. Nutmeg portfolios range from low to high risk and their cash positions can change over time depending on our view of the markets.
You can see where your portfolio has received dividends in the recent activity tab on your account page.
The Nutmeg Investment Team typically opts for accumulation funds when choosing between new funds. The aim of which is to boost the potential for growth within the portfolio. Because the natural income of the portfolio is reinvested within the fund the customer has the potential to benefit from the compounding of returns over time.