Copia Capital Management, the discretionary fund management division of Novia Financial, has launched a range of ETF managed portfolios purpose-built for decumulation of assets during retirement.
Henry Cobbe, Head of Copia Capital Management.
The portfolios are designed to mitigate what is considered to be the key retirement concern – shortfall risk, the risk of running out of money.
Henry Cobbe, Head of Copia Capital Management, said: “Decumulation is very different from accumulation. It has different objectives, different risks and requires a different investment approach. We don’t think it is right to recycle old thinking into this new world.”
Designed to assist advisers looking for a centralised retirement proposition, the Copia retirement income portfolio range offers five different risk profiles, each with four time horizon ranges (3-10 years, 11-15 years, 16-20 years, and 21-25+ years), for a total of 20 portfolio choices.
The portfolios utilize a ‘safe withdrawal rate’ table, developed by Copia, which matches each portfolio to a time horizon in conjunction with national life-expectancy tables published by the Office of National Statistics. The safe withdrawal rate is the statistical maximum that a portfolio, with a given asset allocation, can support such that the expected worst-case (95th percentile) terminal value is positive at the end of the investment term.
“Our retirement income range is purpose-built to give advisers a compliant investment solution that matches a ‘safe withdrawal rate’, risk level and time horizon for each client,” added Cobbe. “It’s retirement risk profiling as it should be.”
Each portfolio is built exclusively using iShares ETFs from BlackRock, which, Copia notes, enhances the diversification, transparency, and efficiency of the portfolios while simultaneously keeping costs low.
Pollyanna Harper, Head of iShares Retail UK Sales at BlackRock said: “Whether the aim is to provide equity income or manage bond duration, using ETFs to build portfolios equips investors with targeted tools for achieving exposures that match their outlook and help pursue their goals. This is an exciting solution for the adviser community.”
Strategic asset allocations are provided by risk modelling firm EValue through its stochastic modelling engine, while tactical asset allocations are driven by the risk barometer from Copia’s proprietary quant model, adjusting portfolio exposures to protect against short-term market risk on the downside.
Copia’s management fee for each of the portfolios is 0.30% + VAT.
Commenting on the launch, Colette Dunn, Head of Strategy at global actuarial and management consultant Milliman, said: “Pension freedoms mean the need for financial advice around retirement planning is greater than ever. It also means there is a clear need for a broader range of retirement-focused solutions that address the key risks of retirement investing. We welcome and encourage innovation in this field.”
While Copia’s portfolios are only available through the Novia platform, they have the facility to launch and run on any other platforms that provide access to ETFs.