– Managing Partners Group marks High Protection Fund’s 14th anniversary with 2% boost for investors.
– Nearly half of professional investors expect dramatic increases in Life Settlements allocations driven by attractive valuations and consistent returns.
Wealth managers and institutional investors are targeting dramatic increases in allocations to the Life Settlements asset class due to increasingly attractive valuations and consistent returns, new research(1) shows.
The study by international asset manager Managing Partner Group (MPG) found 45% of wealth managers and institutional investors who are collectively responsible for $325 billion assets under management predict rapid increases in allocations over the next three years.
MPG is marking the 14th anniversary of its High Protection Fund investing in Life Settlements by adding 2% to all new investments in the fund during July 2023. The fund has delivered total returns of 204.02% since launch in July 2009 and net annualised returns of 9.27% last year.
The 2% reward for investors underlines MPG’s confidence in the asset class’s expansion. The annual gross market potential capacity for Life Settlements is estimated(2) to be as large as USD 220 billion compared to the USD 8.5 billion that was paid out to life insurance policyholders who sold to Life Settlement funds between 2021 and 2022.
The current attraction to the asset class is driven by the pricing of the asset class which currently delivers 12% IRR for its investors. It is therefore one of the very few asset classes that is able to promise returns that are greater than the current rate of inflation
Its confidence is shared by professional investors. A third (33%) questioned across Switzerland, Germany, Italy, the UK and the US said they are extremely likely to invest in Life Settlements over the next 12 to 24 months. Around 55% of investors rated the currently attractive valuations of Life Settlement policies among their top three reasons to invest. Just over half (52%) rated the ability to deliver consistently attractive returns among their top three reasons while 50% said regulatory changes had made investing in the asset class safer.
Nearly two out of five (36%) professional investors expect dramatic growth in investing in Life Settlement funds over the next five years, MPG’s research with wealth managers and institutional investors who are collectively responsible for USD 325 billion assets under management found. More than half (54%) predict a slight increase over the same time period.
Almost all (95%) investors questioned believe the expected growth in the number of Life Settlement policies available for investment will mean more pension funds and wealth managers will invest in Life Settlements for the first time.
Life Settlements are US-issued life insurance policies that have been sold by the original owner at a discount to their future maturity value. They have little or no correlation to equities and bonds.
MPG’s High Protection Fund is seeing strong demand for Life Settlements as an increasingly important part of the alternative assets sector which aims to achieve smooth predictable investment returns of between 8% and 9% per annum, net of fees.
Jeremy Leach, Chief Executive Officer of Managing Partners Group commented:
“The alternatives sector is growing rapidly with assets under management (3) expected to expand to USD 23.2 trillion by 2026 amid increased interest from retail investors and HNW individuals. Life settlements are set to be the biggest winners over the next three years which is why MPG is marking the 14th anniversary of our pioneering fund with an extra incentive for investors.
“Unlike most asset classes, the unique benefit of Life Settlements is that the Fund Manager knows how much profit will be made in advance of purchasing the asset, which enables the Fund to deliver smooth, predictable investment returns even in challenging economic conditions
MPG is a multi-disciplined investment house that specialises in the creation, management and administration of regulated mutual funds and issuers of asset-backed securities for SMEs, financial institutions, and sophisticated investors. It currently manages two funds with a combined gross value of USD 500m.
High Protection Fund
High Protection Fund (the “Fund”) was launched in 2009 and is an absolute return fund that aims to achieve smooth predictable investment returns of between 8% and 9% per annum, net of fees.
The fund offers share classes in a number of different currencies and aims to deliver returns by investing in Life Settlements.
Life Settlements are US-issued life insurance policies that have been sold by the original owner at a discount to their future maturity value and are institutionally traded through a highly regulated secondary market. The market increasingly includes high-profile institutional investors and service providers, including Apollo Global Management, GWG Life, Vida Capital, Broad River Asset Management, Red Bird Capital Partners, Partner Re, SCOR, Berkshire Hathaway, Coventry First, Wells Fargo, Bank of Utah, Wilmington Trust, and Credit Suisse Life Settlements LLC.
The standard deviation in its performance has been 0.13% since launch and its Sharpe Ratio of 4.4907 reflects its excellent consistency in outperforming the risk-free rate. The fund has no initial charges or performance fees which has given it a performance edge on competing funds within the Life Settlement sector.
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