If 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, looking particularly at returns over the last four years 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. But do bear in mind that past performance is not a guide to future returns.
1 minute summary - Which is the best performing stocks and shares ISA?
- The ISA allowance for the current tax year (2023/24) is £20,000
- There are different types of stocks & shares ISA depending on how involved you want to be in choosing and managing your investments
- You can choose between a true DIY ISA, a part-managed ISA or a fully-managed ISA where the investment management is done on your behalf
- This article focuses on fully-managed ISAs so that we can compare past performance
- We've compared the performance of Nutmeg, Moneyfarm*, Wealthify* and Vanguard for 2022, 2021, 2020 and 2019 calendar years
- We also explain why those looking at Vanguard may want to consider Interactive Investor* if they have more than £80,000 to invest
What is a Stocks & Shares ISA?
First a quick reminder of what a Stocks & Shares ISA is. It’s a type of savings vehicle that allows you to invest in funds or stocks while protecting any investment returns you make within the tax wrapper meaning you don’t pay capital gains tax or income tax on any profits or income earned. The ISA allowance for the current tax year (ending on 5th April 2024) is £20,000.
There are different types of Stocks and Shares ISA available depending on how involved you want to be in the investment selection and management, 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 higher 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 as long as 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, read 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 four 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). A performance summary table can be found at the foot of this article.
The performance data for 2022 needs to be taken in context. It was one of the worst years for investing with equity and bond markets globally generally falling more than 20% due to the war in Ukraine as well as rising inflation and interest rates.
Wealthify operates in a similar way to most other robo-advice services, using an automated process to construct portfolios that match clients’ risk tolerances, 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 annualised performance from 2019 to the start of 2023 was 2.94%. But this was hampered by the portfolio's 2022 performance which was approximately -10.3% after fees – placing it near the average for 2022 performance for the portfolios analysed in the table below.
The equivalent ethical portfolio produced an annualised return of 2.29% over the last 4 years, while Wealthify's Ambitious portfolio returned approximately 4.53% annualised over the same period despite the historic slump in investment markets during 2022. The equivalent SRI Ambitious portfolio produced a four-year annualised return of 4.4%.
Wealthify charges a management fee 0.60% (the above performance figures are after the fee has been deducted). Read more in our article “Wealthify review – Is it the right investment choice for you?“.
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.
Nutmeg Medium risk portfolio performance
Let’s say you went for portfolio number six, in the middle of the pack, offering ‘moderate growth without extreme volatility’. Over the four-year period from the start of 2019 to the start of 2023 the annualised return was 5.65% a year, which is above the return you would have experienced with the equivalent portfolios from its competitors Moneyfarm and Wealthify. Nutmeg also has a range of Socially Responsible Investment (SRI) portfolios, often referred to as ‘ethical' or ‘sustainable' investment portfolios and the equivalent ethical portfolio achieved an annualised return of 6.74% a year between 2019 and the end of 2022.
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.
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, Nutmeg portfolio 6 has delivered 37.5% over ten years up until the end of May 2023, and 53.2% since Nutmeg launched in 2012, outperforming its competitors' average return of 36.4% over ten years and 49.6% since 2012. On an annualised basis, Nutmeg has outperformed its rivals, delivering 4.1%, compared to 3.8% a year since launch.
Nutmeg high risk portfolio performance
Looking across Nutmeg’s whole range, comparative performance is better in the higher risk portfolios. Its riskiest offering, portfolio 10 (which isn't shown in the table below), only fell -0.4% in 2022 compared to -2.7% from the competition and has also outperformed since 2012, up 122.8% versus 89.4%, or 7.8% versus 6.2% 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%.
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.
Moneyfarm 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 £575 plus VAT). 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 Moneyfarm's medium risk portfolio with Risk Level 6 (out of 7), you would have made a return of 55.7% between January 2016 (when Moneyfarm launched in the UK) and 1st June 2023. In 2022, the same portfolio would have returned -9.7%. 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. However, Money to the Masses readers can take advantage of an exclusive Moneyfarm offer where your portfolio could be managed for FREE FOR THE FIRST YEAR*.
Read our detailed independent Moneyfarm Review.
Vanguard is one of the largest players in the investment 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.
The LifeStrategy 60% Equity fund sits in the middle of the range, aiming for long-term returns with controlled risk. 2022 was a very disappointing year when the fund made a loss of -11.22%, while the slightly lower risk LifeStrategy 40% Equity fund made a loss of -13.61%. Prior to 2022, both portfolios had consistently been 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.
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“.
It is hard to draw any meaningful conclusions from the performance figures for 2022 alone, with a number of factors influencing markets, impacting all asset classes, with most experiencing losses for the year. A typical 60/40 equity-bond portfolio fell over 11% during 2022.
However, Nutmeg did have a comparatively stronger 2022 across its portfolios than Wealthify, Moneyfarm and Vanguard achieved with their own portfolios, shown in the table below.
In the table below we provide a summary of the relative performance of selected portfolios from Nutmeg, Moneyfarm, Wealthify and Vanguard. We have included annualised performance figures over the last four years (2019, 2020, 2021 and 2022) and we've ordered the table by equity exposure, highest to lowest risk. We have not included the performance of the ethical portfolios provided by Moneyfarm as these only came to market in 2021.
The performance figures should be viewed in the wider context of the longer-term performance figures mentioned above and on each provider's website. All performance figures are after fees have been deducted.
Robo advisors performance comparison table 2019, 2020, 2021 and 2022
The table is ranked from the portfolios with the highest level of risk (as measured by equity exposure) at the top and the lowest risk portfolios at the bottom.
|Provider's portfolio||Annualised return (over 4 years)||% return in 2022 (after fees deducted)||% return in 2021 (after fees deducted)||% return in 2020 (after fees deducted)||% return in 2019 (after fees deducted)||Portfolio's exposure to equities %||
Platform fees per annum based on a £20,000 investment (Does not include fund costs)
|Moneyfarm risk (level 6)*||6.14%||-9.70%||13.70%||6.10%||16.50%||74.00%||£136|
|Nutmeg (Portfolio 7)||7.27%||-3.80%||12.60%||6.30%||15.00%||72.85%||£150|
|Nutmeg SRI (Portfolio 7)||8.20%||-5.80%||13.70%||9.20%||17.20%||72.80%||£150|
|Wealthify (Ambitious Portfolio)*||4.53%||-9.40%||9.72%||5.06%||14.33%||71.45%||£120|
|Wealthify SRI (Ambitious Portfolio)*||4.40%||-17.40%||11.18%||13.43%||14.04%||65.60%||£120|
|Nutmeg (Portfolio 6)||5.65%||-5.20%||9.90%||6.10%||12.70%||62.86%||£150|
|Nutmeg SRI (Portfolio 6)||6.74%||-6.80%||10.70%||9.30%||15.10%||62.24%||£150|
|Moneyfarm risk (level 5)*||4.60%||-9.80%||11.00%||4.50%||14.40%||62.00%||£136|
|Vanguard LifeStrategy 60% Equity||4.94%||-11.22%||9.93%||7.84%||15.24%||60.00%||£30|
|Wealthify (Confident Portfolio)*||2.94%||-10.30%||6.70%||4.87%||11.89%||54.19%||£120|
|Wealthify SRI (Confident Portfolio)*||2.29%||-16.50%||7.63%||9.04%||11.73%||49.20%||£120|
Bear in mind that investing comes with risk and markets can move quickly, as has played out in recent years, so there is no guarantee that the top performers over the last four years will remain so in years to come. Plus, the risk level of the 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)“.
If a link has an * beside it this means that it is an affiliated link. If you go via the link Money to the Masses may receive a small fee which helps keep Money to the Masses free to use. But as you can clearly see this has in no way influenced the above editorial. The following links can be used if you do not wish to help Money to the Masses or take advantage of the exclusive Money to the Masses offers – Moneyfarm, Wealthify and Interactive Investor.