“If you invest £10 per week for the next 30 years at 10% average annual return, which is what Creative Thinking is expected to return, you’ll have ~ £85.000… Every little helps!”
It was November 2018 when Oval first revealed its Opportunities section. We wanted to give you the chance to start your own investment journey by investing your money in those companies and issues that best reflected your beliefs and principles. Most importantly, we wanted to demystify the entire process and give everyone the opportunity, no matter their starting capital, to start investing. The company that helped us make this a reality, was Cirdan Capital Management: "a fintech company looking for new ways to do finance".
Now that the investment section has been live for a while, and going from strength to strength, we wanted to bring you some more information about it and the company who helped us put it all together. So, we sat down with Antonio de Negri, Founder and CEO of Cirdan Capital Management, to speak to him in more depth about the exclusive investment products they have created for Oval.
The Oval products: Smart Indices
Our first question was to ask for some further clarity on the definition of a smart index. At Oval, the investment products are all smart indices, and whilst many of us know the names of the world’s big standard indices - S&P500, FTSE100, and DAX to name but a few - the concept of a smart index is new for many.
“Usually traditional indices like the FTSE100 are designed to represent a market. In the case of the FTSE100, it represents the largest UK corporations, so the criteria of inclusion is pretty simple. Smart Indices however are designed to achieve different goals, for example, to represent a specific segment of the market.”
Essentially, a smart index can be designed using any criteria. It just depends on what part of the market you are looking to track. One of the most important differences between smart indices and traditional indices, though, is risk mitigation.
“Smart indices are designed to provide other benefits, including risk mitigation. While the FTSE100 is solely composed of shares which, as we all know, can fluctuate in price significantly, smart indices may be a mixture of shares and bonds. Bonds are a less volatile asset class and when combined with shares greatly improve the risk profile of the index which will in turn become less prone to price fluctuations.
Habits of Oval Investors
We then talked about the pattern Cirdan have seen from our Oval investors. On the whole, Antonio said that they are seeing more people beginning to invest on a recurring basis, which is great because, as he said, “in the long term, recurring investment is a healthy habit.”
There is also an approximate turnover of 30% of Oval investors liquidating their investments (or a portion of them). However, Antonio confirmed there is also a pattern of these investors coming back to re-invest.
Oval investors also seem to be a risky bunch, with many of you investing in the higher risk products.
We also asked Antonio why he thought so many people distrusted the investment process, and he gave us his expert opinion, drawing an insightful parallel that exposed our fear of the unknown, and trust of the 'known'.
“[People are distrustful of the investment process] Because it is usually incredibly complicated and expensive to invest. Banking platforms are not designed for small investors and the financial information, which is supposed to be retail friendly, is actually quite the opposite. In my opinion this creates the perception of investing as a complicated activity and one full of possible “traps”.”
In the end, people are confident that they understand internal combustion engines - despite the complexity of modern models - because they are driving a car every day. If they were able to invest with the same frequency they would probably have the same perception of investment.
That’s why Oval strives to make investing as transparent and simple as possible, to enable you to make clear choices about what it is you are doing with your money.
Investment is for everyone
Finally, we asked him whether he thought you needed a lot of money in order to start making you own investments. His reply?
“Success in investments is measured in % of return, hence it is quantity neutral.”
Essentially, the amount of money you invest is not what matters! You can start with €10 and keep building slowly.
And when we asked him if investing your spare money with Oval was a good way to start your investment journey?
“[Oval] Investors have the opportunity to access products that offer returns with a diversified risk profile, without incurring minimum fees like any other brokerage or bank! Hence, their returns won’t be impacted by the amount that they invest because they are treated equally to big institutional investors.
So the answer is yes, it’s always convenient to invest if you have spare money.
Leaving money in your bank account, in a negative rate environment, is not an efficient allocation of your capital. Furthermore, if you invest as little £10 per week for the next 30 years at 10% average annual return, which is more or less what Creative Thinking should return long-term, you’ll have around £85.000… Every little helps! ”
Your capital is at risk, and past performance may not be a reliable indicator of future results. Oval Money is not permitted to provide financial advice, and if you have any questions please consult an expert.