JO Hambro moves into life settlement

Nudgem Richyal, a fund manager at JO Hambro Capital Management (JOHCM), has moved into the life settlement market, an area he says is in early cycle growth.

He has added Traded Life Policies (TLPs) to the Global Select portfolio as an uncorrelated asset class, which he says has not experienced the downturn other categories have suffered in the past year.

A life settlement is the transaction in which a life insurance policy owner sells the policy to a third party investor. Richyal says this market is growing fast, particularly in America, where people in retirement are seeking alternative sources of income.
The asset class is benefiting from investor demand to gain access to uncorrelated returns and Richyal calculates the average rate of return at 10% a year.

Richyal and Chris Lees, senior manager on the fund, took a position in Life Partner Holdings in November, the only publicly listed company in the life settlement sector in America. It reported profits in mid-December that beat analyst expectations and previous records.