Life Settlement Fund Launches in Australia

A wholesale fund that enables investors to gain exposure to life insurance policy settlements is now available in Australia.

The fund works like a fixed interest investment as the portfolio managers trade life settlements on the secondary market where the policies are sold at a discount to each policy’s face value.

Chris Renouf, fund manager of the Life Settlements Wholesale Fund, said, “It’s taken us two years to get our story out there and for investors to understand the fund’s potential.”
Renouf said the investments are uncorrelated with other sectors and therefore offer diversification advantages.

According to Renouf, the fund is already available on several platforms, including BT, Macquarie and Oasis. Interest in the fund is also strong in New Zealand, he said.
The Life Settlements Wholesale Fund grew from $10 million to $86 million during 2006 reflecting strong interest in the niche new subsector, returning 9 per cent in the six months
between July and December.

Renouf said super funds in Australia are starting to take notice of this new asset class and already account for one-quarter of the fund’s inflows.
Life settlements are essentially a secondary market for life insurance policies issued by insurance companies in the USA and they are considered a time-valued investment and a humanitarian investment, he said.

In the US life settlement investing is growing at 20 per cent annually.