Australia’s first life settlement fund has rocketed in the past four months to become one of the largest of its type in the world with funds under management (FUM) of half a billion dollars.
The Life Settlements Wholesale Fund (LSWF), launched in October 2004, has grown from $142.9 million FUM in April this year.
“We feel that the Australian market is showing great interest in the product,” LSWF director Laken Mitchell said.
“It’s still an education process because a lot of folks in Australia are not familiar with the asset class.
“Australian investors are very sophisticated, so it doesn’t take them long; they see its tremendous potential.”
Mitchell was part of a delegation of American life settlement industry experts who visited Australia last week.
He is from LSWF US-based partner Life Settlements Providers.
LSWF buys life insurance policies in America from high net worth policyholders aged 65 and older. It bids in tranches of between $10 million and $50 million.
In return for an immediate payout, policies are bought at discount of between 50 per cent and 70 per cent of their face value.
When the policyholder dies the fund receives the full face value, so the yield is determined by time not market forces.
Mitchell said American consumers saw a life insurance policy as a financial tool.
LSWF owns 202 insurance policies from 68 companies. The average life expectancy is 42 months and the average age of the insured is 81.
The fund has investors from 11 countries. Life Settlements Funds fund manager Chris Renouf makes monthly visits to Hong Kong and Singapore to market to financial planners.
The product is structured as a unit trust where investors receive quarterly distributions and dividends from unit price appreciation.
The fund is available on six platforms in Australia – BT Wrap, Macquarie Investment Manager, Strategy, Portfolio Focus Essentials, Symmetry and Access121.
It is on four in New Zealand – Discovery, Aegis, BNZ Custodial Services and ABN Amro.
It is available worldwide on Scottish Life Flexible PIMS.
The minimum wrap investment is $1000 and wholesale investment is $30,000.
