A muted outlook for real returns from equity and bond investments has helped to underpin the attractions of steady, fixed income returns from newcomer The Secured Life Fund, according to the fund’s finance director.
Designed for large pension fund and institutional investors, SLF is constructed to produce regular cash flows without the volatility of stock markets or other traditional benchmarks.
Investors into the fund will be able to choose from either a five, seven or ten year investment period, each of which will provide fixed returns paid annually in arrears.
Returns range from 7.5 per cent for the five year bond, eight per cent over seven years, rising to nine per cent for the ten year bond.
“Holding bonds has proved attractive to institutions as a means of stabilising their balance sheet. However the chase for yield may result in the accumulation of corporate debt at the riskier end of the market,” says finance director Andrew Walters.
“For an institutional fund manager looking for that elusive, rock steady underpinning, SLF ticks all the right boxes.”
SLF works by investing in a combination of cash, cash equivalent assets and principally through the repayment of loans collateralised by US life insurance policies.
The minimum investment is EUR250,000, but there are plans to roll out the fund for smaller sum investments via a UK plan manager.
“The Secured Life Fund is a new concept for UK institutional investors, but has worked extremely well in the US, where the asset class was pioneered,” says Walters. “A major attraction for the ‘big ticket’ institutional investors is the fact that they can enjoy stable and consistent returns which currently outgun most other asset classes.”