The investment manager has taken the time to examine why having a benchmark/index in the life settlement funds industry can be difficult. The trap for the uninformed or novice investor is to distinguish between true benchmark and the marketing “Spin”.
For instance it is best unhelpful and at worst dangerous, to assume a higher headline return is better than a lower return unadjusted for relative risk. Clients need to have some knowledge or appreciation of the risk return trade-off in any transaction and be confident that they have fully taken account of known risks to make a valid comparison. Many an investor, new to the game, has unwittingly taken on risks disproportionate to their appetite or missed value opportunities, through simple lack of knowledge.
In a perfect world where all life insurance policies in the life settlements market were identical, a Life Settlement Index would provide an enormous assistance to investors and enable them to benchmark and clearly evaluate life settlements funds. However, this isn’t a perfect world and not all life insurance policies are identical because not all human beings are identical. In addition, not all life policies have been originated in the same manner.
To investigate this topic further please continue on to the Investment Manager’s Blog.
*This post originally published 27 Mar 2015
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