July 4, 2020

Managing Partners suspends redemptions to life policy fund


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526255-System__Resources__Image-577797From Products By: Helen Burggraf – International Adviser

Managing Partners Ltd, a Cayman Islands-registered asset manager, has revealed that it “imposed a redemption gate” on its Traded Policies Fund last month, becoming the latest traded life policy fund manager to do so in the wake of new restrictions on sales of the asset class announced by the UK regulator in 2011.

In a statement, Managing Partners Ltd (MPL) chief executive Jeremy Leach stressed that the decision to limit redemptions had been made “in the interests of existing and future investors as well as those who wish to redeem”.

In all other respects it is business as usual, investors may continue to subscribe for shares in the usual way,” he added.

Like other life policy funds, the MPL fund sought to generate high returns for investors by investing in the life insurance policies of Americans who are looking to cash them in before they die, in order to enjoy some of the benefits of the money during their lifetime.

According to Leach, the MPL fund had produced returns at an annualised rate of 8.94% since its launch on 1 July 2004.

It was not immediately clear how large the fund in question is, as MPL has a number of traded life funds with similar names. The company did not immediately reply to a request to know which fund in particular the redemption restriction applies to, and what its assets under management are.

FSA move on ‘death bonds”

The UK’s Financial Services Authority surprised many investors and fund managers in November 2011 when it declared it was planning to ban the marketing of traded life policy investments to retail investors, saying that they were “high-risk” and “toxic”. The move was criticised by some has having come too late, stranding many in funds that were suddenly forced to suspend redemptions as investors headed for the exits. One of the most high-profile traded life policy funds to have to suspend redemptions in the wake of the FSA action was EEA Fund Management’s $995m EEA Life Settlements fund.

MPL is registered in the Cayman Islands, where it is recognised as a fund manager by the Cayman Islands Monetary Authority, and has offices in the UK and Hong Kong in addition to Grand Cayman. It operates a number of collective investment schemes besides the TPF fund, including its nine-year-old Sovereign High Security Fund, which launched in 2004.

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