If you know that you want to put some of your cash into a Stocks & Shares ISA, you still might be unsure which provider to choose. It can be a bit of a minefield as there’s a lot of choice out there. This article compares the performance of Stocks & Shares ISAs from a number of popular robo-advisers to help you make the right decision, looking especially at 2019 returns for which we provide an easy-to-read summary table at the bottom of this article. However, we do also look at performance over longer time frames, where a product has a sufficient track record to allow us to do so, throughout this article.
What is a Stocks & Shares ISA?
First a quick reminder of what a Stocks & Shares ISA does. It’s a type of savings vehicle which allows you to invest in funds or stocks while protecting any investment returns you make within a tax wrapper meaning you don’t pay capital gains tax or income tax on any profits earned. The ISA allowance for the current and upcoming tax year (starting on 6 April) is £20,000.
There are different types depending on how involved you want to be in investment selection, and these will each come with different charges. You can choose a true DIY ISA, a part-managed ISA or a fully-managed one where the investment management is done for you, but you will pay a higher management fee for this. This article focuses on fully-managed ISAs so that we can compare performance. For more information on the different types of ISA available, read our article "Where should you invest you ISA allowance?"
You can transfer money held in other types of ISA (a Cash ISA, for example) into a Stocks & Shares ISA and it won’t count towards your annual ISA allowance if you paid into the existing ISA during a previous tax year. You can find more details on this in our article "ISA transfers explained".
For a more general discussion on whether a Stocks & Shares ISA is worth holding, we summarise in our article "Are stocks and Shares ISA's worth it?"
Which is the best performing Stocks & Shares ISA?
For the purpose of this article, we are looking at fully-managed ISAs from five of the most popular UK robo-advisers. We will compare the performance of the model portfolios on offer to try to find the best performing Stocks & Shares ISAs on the market currently (but note past performance is not a guide to future returns).
Nutmeg offers a range of 10 risk-graded model portfolios to choose from, depending on how much risk you are willing to take. Nutmeg establishes your risk tolerance by asking you a series of questions and then recommends a portfolio it thinks will suit you, from ‘cautious’ to ‘aggressive’. The portfolios contain low-cost exchange-traded funds (ETFs) diversified across assets, countries and sectors and Nutmeg regularly reviews asset allocation on its fully managed products to keep them in line with your goals and risk profile.
Let’s say you went for portfolio number five, in the middle of the pack, offering ‘moderate growth without extreme volatility’. In 2019, you would have returned 11.1%, slightly less than the 11.3% from its competitors. Nutmeg also has a range of Socially Responsible Investment (SRI) portfolios, often referred to as 'ethical' or 'sustainable' investment portfolios and they faired better with its SRI portfolio number five returning 12.8%.
Nutmeg’s investment performance figures are based on an account size of £25,000, and are calculated after fees, using data from actual trades rather than averages. The weighted average management fee paid by Nutmeg customers is 0.64%-0.82% per year, depending on the date of investment.
Nutmeg calculates the performance of its competitors using averages, after fees, from a range of discretionary investment managers including Coutts, UBS and Rathbones (rather than the other robo-advisers we refer to in this article).
Over a longer timescale, the portfolio has delivered 19.7% over five years and 43% since Nutmeg launched in 2012, underperforming its competitors which returned 24.8% over five years and 44.6% since 2012. On an annualised basis, it is on a par with rivals, delivering 5.1%, compared to 5.2% a year since launch.
Looking across Nutmeg’s whole range, comparative performance is better at the higher end, so it could be a good option for those looking to invest in higher risk portfolios. Its riskiest offering, portfolio number ten, made 18.7% in 2019 compared to 17.3% from the competition and has also outperformed since 2012, up 87.1% versus 75.5%, or 9.0% versus 8.1% annualised.
In terms of fees, you pay between 0.35% and 0.75% for the fully managed and socially responsible portfolios, depending on the amount you have to invest, and between 0.25% and 0.45% for Nutmeg's fixed allocation portfolios.
There are also fees charged by the underlying funds in robo portfolios (that goes for all of the propositions mentioned in this article and not just Nutmeg), usually of around 0.2%. We don’t explore these in detail in this article in order to keep it concise however we do provide a full comparison in our article 'How does Wealthsimple's fees compare to other robo-advisers?'
Money to the Masses readers can also take our advantage of our exclusive offer where Nutmeg will waive all management fees for the first 12 months. For more details read our independent "Nutmeg review" which also explains more about their overall offering, including investment performance.
We think Moneyfarm is the closest comparable alternative to Nutmeg on the market. The digital wealth manager uses a questionnaire to assess your investing experience, risk tolerance and investment goals, and then recommends a portfolio tailored to you, which is classed as regulated financial advice (Nutmeg recently began offering financial advice as a standalone service for which you pay £350). Moneyfarm constructs a portfolio of ETFs based on its own investment research, and uses volatility targeting when doing your asset allocation, It rebalances portfolios about every three months. As it is giving advice, every year Moneyfarm has to review your portfolio to make sure it is still suitable.
If you had invested £25,000 in a portfolio with Risk Level 4 (out of 7), you would have made a return of 36.3% since January 2016, which is as far back as Moneyfarm’s UK track record goes. In 2019, the same portfolio would have returned 12.11%, so Moneyfarm’s performance looks on the surface to have beaten Nutmeg's equivalent portfolio last year. However, it is important to note that this does not include the impact of fees which would drag on Moneyfarm's performance. Moneyfarm charges a management fee of between 0.35% and 0.75% depending on the size of your investment, and it says a £25,000 pot would set you back about £140-£170 a year in fees.
Read our detailed independent Moneyfarm Review.
With no minimum investment and a low fee strategy, Weathsimple has proved popular with investors since its UK launch. You are given a similar questionnaire to that of its competitors but with a slightly more streamlined approach asking about your income, outgoings and investment goals. Then you get a recommended portfolio made up of ETFs and mutual funds. Its investment strategy is to focus on “fees, diversification and emotions” and let the stock market take care of returns over the long term. But has this approach paid off?
Wealthsimple’s Balanced portfolio (risk level 4, for investors with low to medium risk tolerance) has returned 15.41% net of fees since it was launched in July 2017 up to December 2019. Looking over one year, Wealthsimple’s 2019 performance was 15.7% for this portfolio. Its Growth portfolio (risk level 7) has returned 19.61% since inception, net of fees, and made 21.11% in 2019.
Wealthsimple also has a range of Socially Responsible Investment (SRI) portfolios and the Wealthsimple Balanced SRI portfolio (risk level 4) has returned 16.61% in 2019. Wealthsimple charges a management fee of 0.7%, or 0.5% on pots of more than £100,000.
For a detailed independent analysis of Wealthsimple, read our "Wealthsimple Review". Money to the Masses readers can get an exclusive offer where the first £10,000 will be managed for free for the first year using this link.
Wealthify operates in a similar way to the other robo-advice services, using an automated process to construct portfolios that match clients’ risk tolerance, and it also uses cheap mutual funds and ETFs to keep costs down. Its investment team continuously monitors and rebalances client portfolios to keep them in line with risk tolerance. It had quite a cautious approach in the past, with a lower weighting to equities than you might expect for its medium risk offering, but more recently it has brought its asset allocation more closely into line with other robo-advisers. It has five 'original' Stocks & Shares ISA portfolios as well as five 'ethical' Stocks & Shares ISA portfolios. Its 'Confident' portfolio sits in the middle of this risk-graded range. Wealthify’s 2019 performance on this portfolio was a gain of 4.93% after fees. Its highest risk Adventurous portfolio returned 4.07% in 2019, in comparison.
Wealthify charges a management fee 0.6%. It also has a refer a friend scheme in which you can earn £50 for every friend you refer and you can read more in our article "Wealthify review - Is it the right investment choice for you?".
Vanguard is one of the largest players in the fund space, offering both active and passive funds, although it made its name offering low-cost index tracker funds. Of interest to us here are its LifeStrategy funds, available through its Vanguard Investor platform. LifeStrategy funds are ready-made portfolios of Vanguard index tracker funds, and they tend to have a US equity focus. They come in five different mixes of stocks and bonds, labelled according to their equity allocations.
Let’s look at Vanguard annual returns. The LifeStrategy 60% Equity fund sits in the middle of the range, aiming for long-term returns with controlled risk. In 2019 it made 15.24%, while the slightly lower risk LifeStrategy 40% Equity fund made 12.45%. Both portfolios are in the top quartile over one, three and five years compared to peers in the Investment Association Mixed Investment 40-85% Shares sector, according to FE data, so Vanguard fund performance tends to be strong in the medium to long term.
In terms of fees, the total charge including platform fee on a £20,000 ISA investment would be 0.37% if you bought LifeStrategy through Vanguard’s own platform, Vanguard Investor. It is worth mentioning that if you have more than £80,000 to invest, one of the cheapest ways to buy Vanguard funds is via the Interactive Investor platform, not directly through Vanguard Investor. For more on this tip and for detailed information about Vanguard and its product range and pricing read our full independent "Vanguard Investor UK review".
Last year was a stellar year for investors, with the FTSE 100 up 12.1% - its largest return since 2016 and almost a complete reversal of the 12.5% loss experienced in 2018. Looking across the providers we have considered, here is a summary of their relative performance. But remember this is just one year's performance figures and should be viewed in the wider context of the longer-term performance figures mentioned above and on each provider's website.
Robo advisors performance comparison table 2019
|Provider's Medium risk portfolio||
% return in 2019 (after fees)
|Wealthsimple Balanced SRI portfolio (risk level 4)||16.61%|
|Wealthsimple Balanced portfolio (risk level 4)||15.70%|
|Vanguard LifeStrategy 60% Equity||15.24%|
|Nutmeg Portfolio 5 (SRI)||12.80%|
|Moneyfarm risk level 4||12.11% *|
|Wealthify Confident Portfolio||11.96%|
|Wealthify Confident Ethical (SRI) Portfolio||11.88%|
|Nutmeg Portfolio 5||11.10%|
* does not include impact of fees
You can see that Wealthsimple came out on top with its Balanced SRI portfolio returning 16.61% in 2019 while Nutmeg trailed with a return of 11.10%. It is worth noting that Nutmeg's Socially Responsible Investment (SRI) portfolio 5 finished in the middle of the pack, so Nutmeg's balanced portfolios shouldn't be automatically overlooked based purely on performance. Vanguard was the second-best performer and also the cheapest in terms of fees, so on balance it looks like a good all-rounder.
Bear in mind that investing comes with risk and markets can move quickly, as has played out in recent weeks, so there is no guarantee that the top performers in 2019 will remain so in years to come. Plus, the risk level of portfolio you choose will depend on how much focus there is on protecting your capital from losses rather than making as much as possible in rising markets.
While you may be looking for the best-performing Stocks & Shares ISA, there are other factors that you should consider when selecting a product. This might include factors such as price, asset mix, minimum investment, quality of customer service, investment and product choice, and the options to view and manage your portfolio – whether through an app or a user-friendly website. Check out our article 'The best stocks and shares ISA (& the cheapest fund platform)'.
Looking for a financial adviser near you?
Do you need financial advice? An independent financial adviser can show you how to make the most of your money.
Simply find your nearest qualified and regulated adviser using the UK’s largest adviser search.