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Magna Life Settlement Fund returns 17.6 per cent

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The Magna Life Settlement Fund returned 17.6 per cent in its first 12 months, according to Chartwell Asset Management.

The Magna Life Settlement Fund returned 17.6 per cent in its first 12 months, according to Chartwell Asset Management.

Chartwell says this is the highest 12 month performance ending 30 June 2009 among high yield fixed income funds in Canada.

"The Magna Life Settlement Fund is the first mutual fund in Canada dedicated to investing in this unique investment category," says David Nelson, vice president and chief operating officer for Chartwell Asset Management, the fund’s investment manager.

Senior life settlements provide significant portfolio diversification as they have zero correlation to stock and bond markets.

The investment objective of the fund is to deliver consistent, long-term income by investing in and actively managing a portfolio of senior life settlements issued by life insurance companies in the US scoring at least an A rating with A.M. Best or an equivalent or higher rating. The fund fully hedges the US dollar exposure.

Senior life settlements are transactions involving the purchase of (a) a non-contestable life insurance policy from an elderly insured whose life expectancy can be reasonably projected using standard actuarial models, and (b) the establishment and management of appropriate reserves for payment of premiums over the remaining term of the such acquired policy.

The life settlement industry in the US has grown to an estimated USD15-20bn per year in transactions, making it similar in size to the whole Canadian commercial real estate market.

The investment strategy has attracted institutional investors including Berkshire Hathaway, Deutsche Bank, EFG, Scottish Life and the Royal Bank of Scotland.

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