New Products
Regulator Approves Fund That Taps Life Expectancy Shifts
Europe’s Centurion Fund Managers has won approval from the Luxembourg financial regulator to launch an open-ended fund that seeks to make money from trades in products linked to shifts in life expectancy.
The Centurion Longevity Fund targets an annual return of 6 to 9 per cent and aims to provide low volatility and minimal correlation to equity markets. It was granted approval by the Commission de Surveillance du Secteur Financier.
The fund invests in a blend of life policies and related products, such as equity release in the UK when a person borrows against his or her house to be repaid when that person dies by the sale thereof. It also invests in synthetic population life expectancy products produced by investment banks such as Goldman Sachs and Credit Suisse. These are actuarial insurance-based structures that model life expectancy for the insurance industry.
Simply put, such a fund will perform strongly when people died sooner than the actuarial studies suggest and when it can buy policies at a discount as people are selling them to get liquidity out of their life insurance payments.
The fund is structured as a Luxembourg registered SICAV organised as a specialised investment fund to give it pan-European appeal. It will now be marketed to European wealth managers, family offices and institutions seeking to invest in EU regulated and authorised products. An informal target of $100 million has been set for the fund.
“From an investor perspective this is an open ended fund but we recommend an investment time horizon of a minimum of five years,” David Rawson-Mackenzie, managing director of Centurion Fund Managers, told WealthBriefing. He further notes that, unlike some funds that remain non-correlated to markets until there is a severe market shock and everything falls, life policies really are uncorrelated to market movement “in nearly all circumstances.”
The new Centurion Longevity Fund is denominated in euros, sterling and the dollar with a minimum investment requirement of €125,000 or the currency equivalent.
