InvestmentsJan 13 2015

Novia DFM beats sector benchmark in first year

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Novia DFM beats sector benchmark in first year

Platform operator Novia’s in-house DFM Copia Capital Management’s first full year of results have seen it beat the Investment Association’s industry sector average across all 10 risk models available.

Part of the Novia Group, the firm launched to market a year ago using a quantitative investment strategy for the retail market that it claims has traditionally been reserved for institutional investors and the ultra-high net worth.

Copia DFM has 10 risk-rated model portfolios with dynamic asset allocation over low-cost passive instruments. The performance comparison figures were prepared by independent investment and actuarial consultant Peter Ludvik.

Data show the firm’s money market fund returned 2.83 per cent since launch on 28 October 2013 compared to the IA average of 0.32 per cent; or that the flexible investment fund made 5.94 per cent compared to 5.72 for the IA over the same period.

Evrin Erdem, head of investment at Copia, said the results show that active asset allocation and a choice of value-for-money passive instruments can deliver outperformance.

“Take for example our DFM model 7, here we were able to achieve an annual performance of 6.49 per cent as against the sector average of 5.2 per cent, due in part to the fact that we were invested in the right asset classes at the right time.

“US equities had a good year, Nasdaq-100 beating even the S&P 500, and Japan staged a comeback especially in the last quarter. By dynamically allocating our assets accordingly as predicted by the quantitative algorithm, we were able to successfully capitalise on these gains.”

The use of exchange traded funds in particular kept costs down and provided clean exposure to required asset classes, according to Mr Erdem.

“As we look forward to 2015 we will continue with our dynamic asset allocation strategy and will look to continually enhance our investment universe, leveraging off the significant increases in the number of passive funds and ETFs now flooding the market.”

Copia uses a range of sterling denominated passive funds including unit trusts, Oeics, ETFs and cash products available on the Novia Financial platform.

peter.walker@ft.com