Nutmeg portfolios are built primarily from exchange traded funds (ETF). ETFs aim to track an index as closely as possible, for example, 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.
However, for distribution funds income that arrives in customer portfolios will remain as a cash holding until it is automatically re-invested during our investing cycles 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 Investment activity tab on your activity pages.
Our investment team typically opt for accumulation funds when choosing between new funds aiming to boost the potential for growth within the portfolio. Because the natural income of the portfolio is reinvested our customers have more potential to benefit from the compounding of returns over time.