Our Multi-Strategy Approach: A Compelling Option for Registered Investment Advisors
Bobby Whalen, Senior Advisor, asks our CEO, Rich Beleutz, why AIR Asset Management's multi-strategy approach is a compelling option for registered investment advisors' client portfolios. They cover the multi-strategy's historical consistent returns and low volatility, RIA support, and perspectives on the current market.
TRANSCRIPT
Bobby Whalen. Senior Advisor, AIR Asset Management.
Richard Beleutz. Founder & Chief Executive Officer. AIR Asset Management.
Bobby Whalen: Tell me about the multi-strategy approach.
Richard Beleutz: The multi-strategy approach is broken up into three buckets. The first bucket is life settlements, which is the purchase or sale of an insurance policy in the secondary market for insurance. The second bucket is structured settlements which is the purchase or sale of an annuity or an annuitized payment in the secondary market for structured settlements. And then the third bucket is private credit. We do longevity-focused private credit, which is focused on lending in the longevity space. We have the private credit and the structured settlement components to complement our main investment of life settlements for liquidity and diversification purposes. The structure settlements and private credit component is positive cash flow, while the book of life insurance that we own is a negative carry asset. An additional benefit of pairing the life settlements with the structured settlements is it acts as a “mortality hedge”.
Bobby Whalen: How does AIR Asset Management support RIAs?
Richard Beleutz: So, AIR Asset Management supports RIAs with Continuing Education courses. We have outstanding content on our insights page on our website. We also provide personalized service for financial advisors and investors in terms of answering questions and giving them access to those resources.
Bobby Whalen: So rich, given the current economic environment we're in right now. Interest rates are rising. Inflation's rising. There's a lot of volatility in the stock market. Why should RIAs consider this asset class?
Richard Beleutz: Number one, it's an excellent alternative to traditional fixed income. It's able to generate equity-like returns, double-digit type returns, with fixed income volatility, and it does that in a non-correlated manner.
Bobby Whalen: So, a lot of people have misconceptions about this asset class, but it's actually socially responsible. Can you kind of tell us a little bit about your viewpoint on why it's socially responsible?
Richard Beleutz: The consumers that sell their policies say it's socially responsible, and the reason because it last year alone it put over 660 million dollars into consumers’ pockets. These are seniors. Some of these seniors use that money for health care; they use it for lifestyle and retirement. Senior financial independence is one of the very strong issues out there that ESG investors are looking to address.
Bobby Whalen: My understanding is 90% of policies lapse.
Richard Beleutz: Over 90 percent of the policies lapse, so a lot of times their alternative is either to simply take out the cash value. On average last year, according to LISA, the life settlement industry paid 7.8 times the typical cash value.
Bobby Whalen: So, most seniors aren't even aware this is an alternative? A lot of RIAs are maybe not even aware this is an alternative.
Richard Beleutz: Only roughly 25 percent of individuals seniors even know that Life Settlements is an option to love.