The current climate of a yield-seeking market is driving the demand for life settlements, offering alluring yields of up to 12%. MPG's strategic shift to integrate life settlements into their Fixed Income Fund, traditionally focused on corporate and high yield bonds, reflects a proactive approach to meet the evolving market needs. The anticipated composition will be up to a 50/50 split between life settlements and other assets, hedging against the tempering yield expectations worldwide.
Life settlements refer to U.S.-issued life insurance policies purchased from the original owner at a value lower than the potential maturity worth. Acknowledged for their low correlation to traditional equities and bonds, life settlements present an attractive alternative for investors seeking diversification and robust returns amidst a forecasted challenging year for equities.
Jeremy Leach, CEO of MPG, expounds on this strategic enhancement, “We are now very much in a yield driven market and we expect equities to have a choppy ride with some downward pressure to accommodate the higher yield market which demands higher dividend rates per share.”
Highlighting the synergy between life settlements and fixed income securities, Leach adds, “Life settlements are valued on a very similar basis to fixed income securities as they are investment grade securities that carry a fixed maturity value so there is a natural fit for the blend. Market pricing on Life Settlements currently generates a yield of 12% on a discount basis yield driven basis. That is why we are adding them to our fixed income fund as they will contribute strongly to yields. Inflation-linked bonds have had their day given that inflation is falling worldwide.”
MPG's forward-thinking initiative underscores the firm’s responsiveness to market dynamics and commitment to seeking out unconventional paths to generate value for investors. The infusion of life settlements could well position the Melius Fixed Income Fund as a beacon for those aiming to achieve double-digit performance in a landscape where such outcomes are increasingly coveted.
