The simple answer is NO.. but that does not mean that you have to assume large amounts of risk to get good returns.  What is important is that you identify what the risks are and have specific strategies to mitigate them or otherwise protect your investment capital.

If you are satisfied with low single digit returns then muni’s are probably right for you and I would not waste much time reading further. We are alternative asset specialists and provide strategies that have the potential for double digit returns and we spend a lot of time managing risks.

The fact is that the best returns can be found where they always have been i.e investing in corporations or projects that are creating new value. Whether that be a small company bringing a new product to market, a new clean energy project, or any of the literally millions of value creating opportunities around the globe. If you want returns you need to invest in strong new projects or companies.  Clearly, anything new has risk of failure for any of a million reasons. But do you just have to accept the risk of loss to get these returns?

Absolutely not! Sophisticated investors are adding layers of protection to the deals they do. This is done by “wrapping” the deal with a non-correlated, secure type asset that can repay the principal invested even if the project fails.

Leading investors and banks in Europe are looking to life settlements to fill this roll. Life settlements are one of the most highly uncorrelated assets available, returns are simply not impacted by interest rates, market or political trends. And given the right structure they provide a predictable cash flow. They are not very liquid and have a long term horizon but they are an ideal asset class to protect principal invested in similarly long term projects like real estate, energy, etc.

I would encourage any investor who would like to invest in private equity or project finance to spend time understanding the value that life settlements can play in reducing the risk while maintaining the ability to get yield. Unfortunately many investors seem to prefer to keep their head down and not take the time to understand the opportunity they offer.

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This entry was posted on Monday, August 2nd, 2010 at 4:49 pm and is filed under Life Insurance, Life Settlement Info, alternative investing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.