HIGH YIELDING & LIQUID ASSET CLASS
In the aftermath of the financial crisis, Private Markets have become the most interesting, and generally most profitable asset class, because new regulations and interventions have distorted the process of capital allocation that is central to capitalism. Most investors access Private Markets through investments in Private Equity, which is very illiquid. But it does not have to be- a large universe of Private Markets investments come with very good liquidity and yield just as much as the less liquid assets.
LOW CORRELATION ASSET CLASS
While most assets are typically affected by interest rates fluctuations, earning projections or credit rating shifts, both Life Settlements and Factoring are less sensitive to general drivers of global market turmoil and maintain an uncorrelated nature to traditional assets such as bonds and stocks.
VERY LIMITED CREDIT RISK
In Life settlement, no US Life insurance has ever neglected to pay a legitimate insurance claim. Insurance carriers are heavily regulated and are required to maintain extensive reserves and solvency requirement in each state.
With respect to Factoring, loans are highly over-collateralised by hard assets, and the personal guarantee of the borrower’s principals. They are also structured such that the clients of the borrower, rather than the borrower itself, pays the fund back.
POSITIVE MARKET GROWTH
The US life settlement industry continues to experience significant growth, with an estimated $12bn plus annually in transaction volume, and is expected to reach $100bn in the next decade.
Factoring fulfils a necessary need in the credit spectrum and induces much-needed flexibility in the marketplace. Thus, it has been growing fast and is foreseen to continue growing fast.