As the race continues among purveyors of alternative assets to show which form delivers the highest returns for the least volatility, providers of funds that buy up life assurance policies claim they are producing some strong numbers.

The Assured Fund, which is a traded life settlement fund run by UK-based Policy Selection, said that the value of this portfolio rose by 10 to 11 per cent for retail and institutional investors in the 12 months to the end of June. By comparison, for example, a typical portfolio of fine wines as traded on London’s Liv-ex 100 Index – a classic “alternative asset class” – rose by 8.5 per cent, Policy Selection said.

With life settlement funds, the fund buys an existing life insurance policy, obtaining the full benefit of the policy when the sum assured is payable. Advocates of these funds say that such funds are immune to fluctuating stocks and other markets as once a life policy is bought, the benefit is known. Yields are determined by time rather than market forces.

“Assured Fund, has a remarkably low volatility – a quality much sought after by investors in the current climate – and while the volatility of a return (i.e. the difference between the death benefit and the cost paid for the policy and the on-going premiums) is substantial when considering one policy, it becomes far more certain when considering a portfolio of policies,” said PSL finance director Andrew Walters.

Assured Fund is being marketed to UK financial advisors and institutions. Policy Selection is a private firm, registered in The Cayman Islands.