This fund invests in a portfolio of US life settlements. These are life insurance policies where the insured has an impaired life expectancy. The fund buys these policies for an amount in excess of the policies’ cash surrender values.
The fund pays all the future premiums during the remaining life of the assured but collects the full face value of the policy on maturity. As surrender values from life companies in the US are generally poor, the original policyholder can achieve substantially more from selling the policy to the secondary market.
In its first calendar year 2006, the US dollar fund, the first to be launched, went up by more than 10.5 per cent although the target figure at launch was only 8 per cent. The sterling fund, launched late last year, is already on target to produce an 8 per cent return net of all charges and is available through many Sipp providers.
One of the big attractions is that the price has risen every month since it was launched and is not affect-ed in anyway by volatile stockmarkets. Specialist advisers to the funds are ViaSource Funding Group, which is backed by GE Capital.
Before it buys policies, it obtains two independent life expectancy reports and then its own medical team analyses and reviews these to decide what valuation to put on each policy.
This type of fund is becoming a major alternative investment and it has proved popular in the UK with Sipp investment advisers, IFAs and asset managers. For more information visit its website: www.eeafm.com.