Investor Trends: Investing in Life Settlements and Private Debt to Enhance Portfolio Construction
Our Senior Director of Investor Relations, Andrea Hoch, explores the latest allocation trends for Family Offices and RIAs in today's market. She highlights how life settlements and private credit may help diversify risk, generate attractive returns, and dampen overall portfolio volatility.
TRANSCRIPT
Andrea Hoch, Senior Director of Investor Relations, AIR Asset Management.
My name is Andrea Hoch. I'm the Director of Investor Relations at AIR Asset Management. I work closely with investors in my role to provide support and insights into our investment strategies.
We're seeing interesting trends amongst wealth advisors. According to the UBS Global Family Office Report, advisors increasingly use alternative assets to generate yield. 77% of them expressed difficulty in finding uncorrelated returns, with one-third considering private debt and illiquid strategies as suitable replacements for fixed income. Additionally, around 50% of family offices want to increase their allocations to illiquid assets, which provide a buffer against current market volatility.
In addition, Registered Investment Advisors (RIAs) are also embracing alternatives. A recent study by CAIS, which included 200 financial advisors overseeing over 2 Trillion in assets, revealed that 9 out of 10 advisors intend to increase their allocations to alternative asset classes over the next two years.
Life settlements tend to exhibit low correlation and low volatility compared to broader market returns. Essentially, life settlements are life insurance policies, with the primary factors of their returns being the life expectancy of the insured individual, the death benefit, and premiums paid.
When considering the efficient frontier, we observe that life settlements demonstrate a history of low volatility. Their standard deviation of returns is lower than that of the broader equity market and comparable to bonds. This makes life settlements an attractive component of a portfolio, particularly during times of market volatility.
I encourage investors to visit our website at airassetmanagement.com/insights to learn more about AIR Asset Management and life settlement investing, and our team of investment professionals is always available to answer any questions that might occur. Please feel free to contact us at our contact form on our website or by emailing us at info@airassetmanagement.com.