EUROPE - European institutional investor interest in traded life policy (TLP) funds has risen since the recent subprime credit crunch, according a report prepared by Bristol Business School for Managing Partners Limited (MPL).
Jeremy Leach , MPL's managing director, told IPE today: "Institutional appetite has been considerably increased, possibly because of the change in the market in the last few months."
Leach pointed out that institutional investors are increasingly diversifying away from equities, bonds and property into asset classes that deliver very smooth, predictable levels of return.
TLP funds, the US counterpart of traded endowment policies, are therefore becoming more mainstream with their mid-term emphasis, argues MPL.
In the past 12 months the firm says it has seen a 50% growth in asset under management. It currently manages £200m for institutional investors.
In particular, German, Italian and Swiss institutional investors have shown interest in recent months, said Leach.
"Its risk profile is very similar to a gilt fund or possibly a cash fund though not as liquid," he added. Returns are around 7% to 9% per year.
Merlin Stone of the Bristol Business School, which wrote the report on TLP funds, commented TLP funds are a low risk and transparent alternative investment.
"It's not correlated with stock, bond, currency markets or proxy markets," said Stone. "For the pension fund manager, it is an ideal bedrock investment for the medium term."