New life for life settlements fund

Tuesday, December 02, 2008

WAY Fund Managers is linking with leading life settlement fund provider EEA Fund Management (Guernsey) (EEA) to launch on December 8 its own class of the EEA Life Settlements Fund.
Investors will be able to access WAY's range of inheritance tax (IHT) solutions while adopting an investment strategy uncorrelated to equity markets and promising smooth and steady returns.

Since it launched its Life Settlement Fund in 2005, EEA has delivered consistent results, with 34 consecutive positive months' returns to end October 2008.

The fund focuses on the US market and targets total returns of 9%-10 % net of charges, with an investment benchmark to provide 8% annual net return to investors.

Commenting on the success of the strategy, the company said its rigorous testing and due diligence meant it was able to ensure the fund manager adopted the most conservative of approaches. For example, the average life expectancy within the fund portfolio is 39 months. EEA determines a wide spread of medical and life company risk. It does not use mortality tables to measure risk and fund valuation. It does monitor the health of each life assured individually. Each policy considered for purchase is scrutinised against a set of strict criteria and two independent life expectancy reports are commissioned to determine a fair price.

EEA also adds 12 months to the life expectancy of each individual as a further security and does not buy any policy with a life expectancy of more than eight years.

The fund is an open-ended investment solution. It currently owns 277 policies making it one of the most diverse life settlements funds in the market with an average life company rating of A+.

A life settlement is the sale of a US life policy to a third party where the policyholder has an impaired life expectancy. Just as equity funds invest in equities or property funds, life settlements funds invest in life assurance policies.

Source: Hedge Funds Review