Copia launches factor-enhanced portfolios

Feb 1st, 2018 | By | Category: ETF and Index News

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Copia Capital Management, the discretionary fund manager of Novia Group, has launched its “Select Plus” range of managed portfolios aimed at the UK adviser market. The suite of five portfolios are constructed using a blend of ETFs, as well as funds by Dimensional Fund Advisors, and provide access to risk premia associated with certain factor exposures.

Hoshang Daroga, quantitative investment manager at Copia

Hoshang Daroga, quantitative investment manager at Copia.

Like its ‘Select’ range, which was launched in November 2016, each portfolio in the Select Plus range is mapped to a different risk profile and has been designed for medium- to long-term investors in the accumulation phase of their lifecycle.

While the Select range exclusively uses ETFs (traditionally broad market cap-weighted ETFs) for each asset class exposure, the Select Plus range also employs factor-based Dimensional funds for exposure to specific asset classes such as UK, US, European and emerging market equities.

The portfolios combine the systematic factor-based approach embedded in the underlying Dimensional funds with Copia’s proprietary quant-based approach to asset allocation, seeking to diversify across asset class, geography, and also across factors.

Strategic asset allocation is identical to the existing Select range and is driven by capital market assumptions from BlackRock Investment Institute. Tactical asset allocation for risk control is identical to the existing Select range and is driven by Copia’s Risk Barometer which summarises outputs from Copia’s proprietary Quant Model.

Hoshang Daroga, quantitative investment manager at Copia, said, “This is another exciting first for Copia. There are plenty of advisers who use Dimensional funds because they understand and like how a systematic factor-based approach can help diversify a portfolio and potentially enhance returns. We are offering that within the framework of our risk-profiled, multi-asset portfolios to help advisers match investment strategy to their clients’ needs.”

David Jones, head of financial adviser services, EMEA, Dimensional Fund Advisors, added, “We are delighted that Copia is launching their Select Plus range of model portfolios using Dimensional Funds. We believe that client-focused advice and efficient, value-added access to the capital markets can be a successful combination for both advisers and their clients. Copia’s Select Plus range brings this approach to a new audience.”

The Copia Select Plus suite has five risk profiles: cautious, moderate, balanced, growth and equity. Factor exposures include both the size (small-cap) and value factors for regional equity markets.

The blended total expense ratios (TERs) of the funds and ETFs within the Select Plus portfolio reflect the higher costs generally associated with moving away from a purely ETF-based allocation. The blended TERs of the funds and ETFs underlying the portfolios are as follows: cautious (0.17% for Select vs 0.28% for Select Plus); moderate (0.21% vs 0.34%); balanced (0.24% vs 0.42%); growth (0.24% vs 0.46%); and equity (0.24% vs 0.49%).

On top of this, Copia’s portfolio management fee is 0.30% + VAT.

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