Integrity Financial Solutions is hoping to avoid previous problems associated with the traded endowm...
Integrity Financial Solutions is hoping to avoid previous problems associated with the traded endowment policy industry by launching a product with guarantees built into both the payment of premiums and on the maturity of policies.
The firm's Utopia fund, an Isle of Man-domiciled Oeic, is offering assured returns of at least 8%pa after charges over 10 years from investments in US jumbo senior life policy settlement policies.
The policies are usually taken out for senior managers who later try to sell them on to meet other expenses such as medical costs. Those purchased by the fund typically pay out $5m based on a typical life expectancy from purchase of three years.
The fund seeks to hedge out the risk of someone living past their life expectancy by taking out a guarantee, at a cost of around 6% of the policy value, that the payment will be made 12 to 24 months after the expected death of the assured life. Integrity calculates that even if this stop-loss guarantee is used for all policies, the fund can generate returns upwards of 8%pa over 10 years. If managers are 90% accurate on their predictions of policy maturity, they assess returns will exceed 17%pa.
The fund's premium account is being run by HSBC, which will compensate investors in the event of missing any payments.
Units can be bought directly, through a life firm offshore portfolio bond or via a Ssas or Sipp.
Managing director Iain Stamp said: "As the Utopia fund is uncorrelated to and unaffected by fluctuations in the stock market, oil price or interest rate volatility it is a very stable investment vehicle."
There are no initial fees, although back end charges, which start at 9%, will apply for investors who exit in the first five years.
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