Life settlement fund predicts positive returns for 2009

Date: Monday, January 12, 2009
Author: Hedgeweek.com

The Assured Fund, which invests in the US senior life settlements market, has forecast a minimum nine per cent return for 2009.

The Assured Fund, managed by Policy Selection, says its Sterling Share Class C has outperformed government gilts and as the returns are based on pay outs from maturing life policies held within the fund, investors do not have the worry of the market volatility which has plagued equities.

UK savers currently outnumber borrowers by seven to one.

'Stock market volatility in 2008 saw many investors making a flight to cash to shield against falling equity values, but that cash is now doing nothing as the Bank of England has slashed its base rate to the lowest level in history,' says Policy Selection's Andrew Walters (photo).

'Investors are fundamentally looking for more reliable investment vehicles: older investors in particular now face the stark reality of being in negative territory with their cash, as savings accounts are not keeping pace with the cost of living.'

The fund invests in US life assurance policies sold on the second-hand traded market by elderly US citizens - the typical age of policy holders is between 75 and 85.

Like similar products in the UK, the US-based policies carry a guaranteed death benefit and the sum assured. When the policyholder dies, the sum assured is realised, with Assured Fund receiving the proceeds.

'The market for these policies is developing at a rapid rate, and is now worth well over USD10bn,' says Walters.