The next 12 months will see portfolios managed by professional investors increase their allocation to alternatives, according to new research from Managing Partners Group.
This future increase comes as 97% have already increased their allocation to alternatives over the past 12 months.
The wealth managers, pension funds and other institutional investors surveyed in MPG’s research, who are collectively responsible for £258 billion assets under management, admit that their perception of alternative asset classes has changed over the past two years. 96% say that they have become more positive about alternatives, with 33% saying they’ve become much more positive. Only 1% say they’ve become more negative about alternatives in the past two years.
Out of those who have become more positive about alternatives, the top reason for this change is that there is now a greater transparency in reporting around alternatives (58%), followed by an improved track record of returns (54%). 40% say there are more alternative funds or investment strategies to choose from, and 15% say there is now a greater level of innovation in the alternative asset management sector.
The research for MPG, which runs the High Protection Fund investing in Life Settlements, reveals the top benefits from investing in alternatives as listed by the 100 professional investors surveyed across Switzerland, Germany, Italy, the UK and the US. These are providing an attractive yield (58%), providing a hedge against inflation (52%), providing strong growth in valuations (42%), offering attractive diversification benefits (21%) and lower volatility (10%).
MPG’s 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 9.28% 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 296.91% 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: “Our research shows that attitudes towards alternatives among professional investors have changed significantly in recent years, due to a number of contributing factors including improvements in reporting and greater levels of innovation. The alternatives sector is growing rapidly, with assets under management expected to expand to $23.2 trillion by 2026 (2) and are showing their strength in times of high inflation and offering attractive yields.”
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. It currently manages two funds with a combined gross value of $500m.
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 4.4323 reflects its excellent consistency in outperforming the risk-free rate. The fund has no initial 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 1.81% and a Sharpe Ratio of 0.5378
