Life settlements are the sale of US life insurance policies to a third party, where the insured has an impaired life expectancy. The EEA life settlement fund pays all future premiums during the insured’s lifetime and collects the full value of the policy at maturity. This makes the fund uncorrelated to other asset classes when markets are volatile and has helped its US share class produce 38 consecutive months of positive returns. The EEA fund’s sterling share class achieved growth of 11.25 per cent over the 12 months to the end of January while the FTSE 100 was down by 29.4 per cent over that period.
Gartmore head of multi-manager Tony Lanning says the fund has the same risk and return profile as his multi-manger portfolio and it was thoroughly checked out before Gartmore invested. He says: “We have taken due diligence very seriously. We visited the people in the US who run the fund and looked at the life settlement policies to make sure they existed.”