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traded endowments

Endowment policy funds are pooled in to life insurance companies with-profits funds which often invest in a range of assets including overseas equities, fixed interest securities, property, alternative investments and cash.

TEP Investments are characterised by:
  • attractive returns following discounted asset acquisition
  • significant capital guarantees which provide unique 'downside protection'
  • low volatility owing to 'smoothing' and a balanced underlying investment portfolio

However, secondary life asset performance is largely dependent on the skill and experience of the fund manager/adviser and, selecting the right partner is critical. In-depth due diligence in the asset selection process is therefore essential, and the key consideration for any Traded Endowment Policy investor should include an assessment of the Fund Manager.

Some key aspects to consider when selecting a TEP Fund Manager are:

Experience and Capability:  Desirable characteristics include time in market, significant operational capability, in-house expertise, and a dedicated actuarial team.

Transparency:  An absolute necessity to identifying conflicts of interest. All interests should be aligned to delivering performance for the shareholder.

• Valuation Methodology:  Not all valuation methodologies are created equal. Most valuation methods use mark-to-model therefore can differ greatly. It is crucial that the investor understands the relationship between true value of assets and the share price.

Pricing Methodology:  Understanding pricing methodologies at point of purchase is vital. As with valuation, not all pricing methodologies are created equal.

Actuarial Input:  Policy selection should be guided by an actuarial model designed to build a portfolio with shareholder objectives in mind. Output from the model should include policy criteria to ensure only appropriate policies are acquired.

If you would like to learn more about the attractive investment opportunities in TEPs, or have any questions, please contact Alec Taylor, Head of TEP Investments:

T: +44 (0)1244 317999

Latest News

BlackOak Investors LP SL's latest Life Settlement fund has produced annualised returns of 16.9% to end Dec 2019, with 88.4% of performance achieved through realised gains. Find out more about BlackOak Investors LP How to select a life settlement fund manager 10 key questions investors should be asking life settlement fund managers prior to investing. Find out more about How to select a life settlement fund manager With-Profit performance 2018 Our actuarial team summarises the latest performance of UK Life Company with-profit funds for year ending 2017. Find out more about With-Profit performance 2018


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