- Hedge fund asset class will also benefit as professional investors shift allocations over the next three years
- Demand for alternatives is driving growing interest in Managing Partners Group High Protection Fund investing in life settlements
Allocations To Real Estate And Life Settlements Expected To Rise
Real estate and life settlements are the alternative asset classes set to benefit the most as professional investors review allocations, according to new research (1) from Managing Partners Group (MPG), the international asset management group.
Nearly half (47%) of professional investors questioned (pension funds, family offices, insurers and wealth managers) by MPG across Switzerland, Germany, Italy, the UK and the US expect allocations to real estate to increase dramatically over the next three years while 45% believe allocations to life settlements will see major growth.
MPG’s research with wealth managers and institutional investors who are collectively responsible for £258 billion assets under management shows hedge funds will also see dramatic increases in allocations with 44% forecasting major shifts in allocations.
The study found less support for commodities and high-yield bonds. Around a third (33%) predict dramatic increases in allocations to commodities while 28% believe high-yield bonds will see dramatic growth in allocations.
The research for MPG, which currently manages two funds – the High Protection Fund investing in Life Settlements and the Vita Nova Hedge Fund – with a combined gross value of $500m found 10% of professional investors do not know which asset classes will see dramatic increases in allocations.
Its High Protection Fund is seeing strong demand for Life Settlements as a growing part of the alternative assets sector. It delivered net annualised returns of 9.27% in 2022 and attracted net inflows of $20 million. Life Settlements are US-issued life insurance policies that have been sold by the original owner at a discount to their future maturity value. They have little or no correlation to equites and bonds.
The High Protection Fund has returned 196.91% since it was launched in July 2009. It aims to achieve smooth predictable investment returns of between 8% and 9% per annum, net of fees.
Jeremy Leach, Chief Executive Officer of Managing Partners Group commented: “The alternatives sector is growing rapidly with assets under management (2) expected to expand to $23.2 trillion by 2026 amid increased interest from retail investors and HNW individuals. That is driving increased allocations to separate asset classes with real estate, life settlements and hedge funds set to be the biggest winners over the next three years.”
The table below shows the views of professional investors on allocations over the next three years.
|
Asset class |
How many professional investors believe allocations will increase dramatically |
How many professional investors believe allocations will increase slightly |
How many professional investors believe allocations will stay the same |
How many professional investors believe allocations will decrease |
How many professional investors don’t know what will happen to allocations |
|
Real estate |
47% |
31% |
21% |
– |
1% |
|
Life settlements |
45% |
37% |
18% |
– |
– |
|
Hedge funds |
44% |
44% |
12% |
– |
– |
|
Commodities |
33% |
39% |
26% |
2% |
– |
|
High yield bonds |
28% |
39% |
32% |
– |
1% |
|
Don’t know |
10% |
26% |
13% |
5% |
46% |
MPG is a multi-disciplined investment house that specialises in the creation, management and administration of regulated mutual funds and issuers of asset-backed securities for SMEs, financial institutions, and sophisticated investors.
High Protection Fund
High Protection Fund (the “Fund”) was launched in 2009 and is an absolute return fund that aims to achieve smooth predictable investment returns of between 8% and 9% per annum, net of fees.
The fund offers share classes in a number of different currencies and aims to deliver returns by investing in Life Settlements or companies that invest in Life Settlements.
Life Settlements are US-issued life insurance policies that have been sold by the original owner at a discount to their future maturity value and are institutionally traded through a highly regulated secondary market. The market increasingly includes high profile institutional investors and service providers, including Apollo Global Management, GWG Life, Vida Capital, Broad River Asset Management, Red Bird Capital Partners, Partner Re, SCOR, Berkshire Hathaway, Coventry First, Wells Fargo, Bank of Utah, Wilmington Trust, and Credit Suisse Life Settlements LLC.
The standard deviation in its performance has been 0.13% since launch and its Sharpe Ratio of 4.4460 reflects its excellent consistency in outperforming the risk-free rate. The fund has no initial charge or performance fees which has given it a performance edge on competing funds within the Life Settlement sector.
Vita Nova Hedge Fund
Vita Nova Hedge Fund is a mutual fund that aims to achieve long term capital growth by identifying short to medium term investment opportunities with inherent pricing weaknesses and the potential to improve over time. The fund’s investment management team may rely on economic forecasts and analysis in respect of interest rate trends, macroeconomic developments, global imbalances, business cycles and other broad systemic factors to identify pricing weaknesses with the potential to strengthen over time.
Where the Manager identifies value opportunities it has the ability to use gearing to over invest wherever possible whilst preserving liquidity to afford relatively quick changes to the portfolio weighting and to take advantage of short-term arbitrage and alpha opportunities.
Vita Nova Hedge Fund may hold other investments including cash or near-cash assets, units or shares in other collective investments schemes, listed securities and registered companies.
Vita Nova’s annualised rate of return since its launch in August 2014 is 22.05% with a standard deviation of 1.80% and a Sharpe Ratio of 0.5374.
For more information on Managing Partners Group see: www.managingpartnersgroup.com
