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Traded life policy fund sees 94 per cent asset growth over 12 months

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The Assured Fund, a US senior traded life policy fund managed by Policy Selection, has reported growth in assets of 94 per cent over the past 12 months, while the number of policies held b

The Assured Fund, a US senior traded life policy fund managed by Policy Selection, has reported growth in assets of 94 per cent over the past 12 months, while the number of policies held by the fund has increased from 116 at the end of March 2007 to 229.

The average value of the individual policies within the fund is now USD2.65m, and investors are currently enjoying returns of nearly 10 per cent a year, according to Policy Selection.

The Assured Fund, which currently being marketed to UK IFAs, has enjoyed 9.13 per cent growth over the past 12 months, while institutional C class shares have seen growth of 10.26 per cent.

The growth of the Assured Fund, which Policy Selection says is one of the biggest open-ended funds of its type, reflects the rising number of people living well into their 80s. ‘The US demographic is such that the pre-baby boomer generation is now coming to an age when it makes sense for them to trade their life policies on the market,’ says the firm’s business development director Rogan Redfarn.

‘The fund is immensely attractive to investors looking for growth in their portfolios in today’s market conditions. While the FTSE 100 index fell by 11.72 per cent in the three months to the end of February, the Assured Fund grew by 2.06 per cent, with no risk to capital.’

The fund invests in US life assurance policies being sold on the secondary market by elderly US citizens, typically aged between 75 and 85. Reflecting similar products in the UK, the US-based policies carry a guaranteed death benefit and the sum assured. When the policyholder dies, the full sum assured is realised, with the fund then receiving the proceeds.

‘The good news for UK IFAs is that they can steer their clients into the B share class with a minimum of just GBP10,000,’ Redfarn says. ‘This compares with a GBP35,000 minimum for the institutional investment class.’

The Assured Fund is currently valued at USD379m. Policy Selection predicts that the market will grow at an exponential rate in 2008 as retail investors look beyond equities to obtain growth in their portfolios.

‘It is one of the few asset classes that makes good sense in today’s exceptionally volatile market conditions,’ Redfarn says. ‘Independent financial advisers looking for a core capital growth investment as an alternative to with-profits funds will find the excellent returns very attractive for their clients.

‘The Assured Fund is also perfect for self-invested personal pensions, for example, and hands-on investors will take comfort from the fact that the fund has an outstanding four-year track record showing solid capital growth since 2004.’

Policy Selection was established in the Cayman Islands in 2003 and specialises in the US senior life settlement market. The Assured Fund is an independent company domiciled in the Isle of Man with its own board of directors and is audited by PriceWaterhouseCoopers.

The fund is available for investment through IFAs, who receive 4 per cent commission. The minimum initial investment in the B share class recommended for UK investors is GBP10,000, with further incremental investments of GBP1,000 permitted. The management fee ranges from 0.75 to 2.25 per cent, depending on the share class.

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