Nutmeg constructs portfolios on your behalf using exchange traded funds (ETFs). ETFs provide an easy way to gain exposure to a pool of investments without having to buy each one individually. They can track an index, such as the FTSE 100, or hold Government and corporate bonds. One of the potential downsides, however, of an ETF is that, because it does not always hold every asset in the index that it is trying to replicate, there will always be a slight difference between its performance and the underlying investment that it aims to track. Although this “tracking error” can sometimes work in an investor’s favour, it can also work against them.
ETFs traditionally have a lower annual management charge than other collective investment vehicles, such as unit trusts, investment trusts and open ended investment companies.
Read more about ETFs in our ETF guide »