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Way joins forces with EEA Fund Management to launch US life settlement fund


Way Fund Managers, part of a UK-based group of independent financial advisers, is teaming up with life settlement fund provider EEA Fund Management (Guernsey) to launch its own class of th

Way Fund Managers, part of a UK-based group of independent financial advisers, is teaming up with life settlement fund provider EEA Fund Management (Guernsey) to launch its own class of the EEA Life Settlements Fund.

From December 8, experienced and high net worth investors will be able to access Way’s range of inheritance tax solutions in combination with an investment strategy that the firm says is uncorrelated to equity markets and promises smooth and steady returns.

Since the launch of the Life Settlement Fund at the close of 2005, it has delivered positive returns for 34 consecutive months up to the end of October. An open-ended fund that invests in US life settlements, it targets total returns of between 9 and 10 per cent net of charges, with an investment benchmark of providing an 8 per cent annual net return to investors.

‘This new initiative is a major breakthrough in terms of inheritance tax planning as we can now utilise one of the most effective investment vehicles currently operating in the marketplace,’ says Way head of sales Eddie O’Gorman.

‘The steady near-certainty of returns on this fund is likely to appeal to more cautious investors alarmed by the fallout in equities since the credit crunch started to bite – and the comfort of being able to access a fund that has achieved 34 consecutive months of positive returns will go a long way to allay wider investment concerns.’

According to O’Gorman, Way Fund Managers deployed rigorous testing and due diligence to provide reassurance that EEA adopted a highly conservative investment approach. ‘For example, the average life expectancy within the fund portfolio is 39 months, and EEA determines a wide spread of medical and life company risk,’ he says.

‘It does not use mortality tables to measure risk and fund valuation but monitors the health of each life assured individually – in other words, each policy considered for purchase is carefully 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 further security, and does not buy any policy insuring a life with expectancy of more than eight years.’ The fund currently owns 277 policies, which Way says makes it one of the most diversified life settlements funds in the market.

The fund invests in US policies because the country’s legislation governing insurance companies stipulates that any policy running for at least two years cannot be contested from that point onwards, making US policies a safer and more predictable investment.

The minimum investment in the fund is GBP20,000 and there is an initial charge of 5 per cent plus an annual management fee of 1.95 per cent. IFAs receive initial commission of 3 per cent and annual trail commission of 0.5 per cent. The fund’s US dollar class launched in November 2005 has returned an annualised average of 8.72 per cent, while the sterling class has achieved an annualised 10.22 per cent since its launch in February 2007.

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