Found this article today while reading Citywire, this is discussing UK based funds, however there business and actions are sometimes US based as well…
As the hunt for income gets ever more desperate in the low interest rate environment, on paper offer an attractive proposition, but wealth managers remain cautious about using them for their clients.
Lots of question marks have been raised over these funds with the trading of life settlement policies for a profit deemed to be unethical in some quarters. There have also been issues about a lack of transparency.
However, some parts of the market appear to have cast aside these concerns. In March, the £250 million EEA LIfe Settlement fund attacted more than £28 million in inflows, which is impressive given many retail funds have haemorrhaged money in recent months.
The fund boasts 38 consecutive months of positive returns. It is on a yield of 4% and returned 11.8% in 2008.
The fund’s manager, Peter Winders, admits investors looked at the figures and harboured a ‘too good to be true mentality’, particularly in the post-Madoff age.
There were also concerns about the liquidity of life settlement funds.
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