More than three-quarters of institutional and IFA investors in traded life policies will be increasing their exposure to the asset class over the next year, according to a poll by bouti
More than three-quarters of institutional and IFA investors in traded life policies will be increasing their exposure to the asset class over the next year, according to a poll by boutique fund manager Managing Partners.
The survey results back up a report commissioned by MPL from Professor Merlin Stone of the Bristol Business School, entitled The Market for Traded Life Policies 2008, which indicated that investment by both retail and institutional investors in TLP funds rose by more than 50 per cent over the 12 months to the beginning of November.
The report found that the combined assets of the five largest funds distributed in the UK grew from the equivalent of USD405.2m on 1 November 2007 to USD621.4m a year later.
Traded life policies are US-issued whole of life policies sold before their maturity date to allow the original owners to enjoy some of the benefits during their own lifetimes. They are gaining increasing recognition for their ability to deliver steady, predictable returns uncorrelated with other asset classes.
In the 12 months to 1 January the sterling growth share class in MPL’s Traded Policies Fund, which is open to retail investors, returned 10.47 per cent net of all charges, while the Institutional sterling share class returned 10.56 per cent.
More than two out of five (44 per cent) of the respondents in the survey said they would increase their exposure by up to ten per cent; over one in ten (12 per cent) said they would do so by 11-20 per cent; and nearly one in four (24 per cent) said they would do so by more than 20 per cent. None said they would reduce their exposure while the remainder (eight per cent) were undecided.
Favourability towards TLPs was high. Four out of five (80 per cent) of the respondents said they were either very favourable (32 per cent) or quite favourable (48 per cent). Only 16 per cent said they were undecided. None said they were unfavourable.
There was overwhelming support in favour of TLPs being regarded as a separate asset class in their own right, with nearly nine out of ten respondents (88 per cent) agreeing this should be the case. In the survey, 87 per cent of IFAs and 90 per cent of institutional investors agreed. Only four per cent were against this (seven per cent of IFAs and zero per cent institutions) and eight per cent did not know (seven per cent of the IFAs and ten per cent of the institutions).
PML managing director Jeremy Leach (pictured) says: ‘Our Traded Policies Fund, which is open to both retail and institutional investors, delivered double-digit returns in 2008, when investors were suffering losses from their holdings in equities, bonds and even cash.
‘It is hardly surprising that investors are looking to raise their exposure to an investment that offers steady, predictable returns no matter what is happening in other asset classes. This reinforces the case for TLPs to be recognised as an asset class in their own right.’
