As the world grapples with economic tides that shift and churn unpredictably, dictated mainly by oscillations in inflation and many central bank decisions, many investors are scrambling for direction.
They’re now seeking refuge in traditionally stable investment strategies and sectors — with the life settlement niche poised to attract many interested parties owing to its resilience amidst market turbulence.
Right in the heart of this sector is AIR Asset Management, a leading provider of life settlement and longevity-related investment solutions led by Richard Beleutz.
As Beleutz highlights, today’s macroeconomic environment is a roller coaster ride. Fluctuating interest rates, inflationary pressures, and the looming shadow of geopolitical tensions contribute to uncertainty and volatility, especially regarding asset management.
For investors, these conditions pose significant challenges — but also opportunities. “There’s a growing number of investors seeking shelter from the storm in the form of alternative investments,” Beleutz states. “They’re looking beyond conventional asset classes and turning their attention to sectors that offer a degree of insulation from broader economic conditions.”
His view on navigating this volatility is clear: it’s about understanding the nuances of your chosen asset class and leveraging its unique qualities to weather any economic storm.
Beleutz’s philosophy is perfectly reflected in how AIR Asset Management does business. More precisely, Beleutz and his team have championed the concept of life settlements as an “all-weather” investment.
“The primary advantage of our asset class, beyond its non-correlation, is its low volatility,” Beleutz shares. “Combining low correlation and volatility with high single or low double-digit absolute returns in most markets presents a compelling value proposition.”
Amid escalating interest rates and inflation, the investment community has found itself in a bind, with traditional assets bearing the brunt of these shifts. On the other hand, life settlements have avoided getting hit, instead showing unparalleled stability and attractive returns.
This becomes evident in the secondary market transaction data during the pandemic. The life settlement sector remained relatively intact, going from $4.6 billion in face amount in 2020 to $3.9 billion in 2021 and then back to $4.9 billion the following year. The remarkable rebound showcases the sector’s exceptional knack for stability, even in the face of some of the most uncertain times.
Nevertheless, even here, there are nuances worth exploring — and understanding. The sector remains uncorrelated mainly to the broader landscape, but it doesn’t mean it’s completely immune to the macroeconomic shifts.
While AIR Asset Management’s assets don’t directly bend under the weight of inflation hikes, the ripple effects of such extreme scenarios cannot be ignored. “If interest rates were to reach double digits, as seen in the early ‘80s, demand for our low double-digit uncorrelated return stream might decrease,” Beleutz says.
This could introduce demand-driven correlations, not because the intrinsic value or returns of life settlement would change but because the relative attractiveness of the returns in the broader investment marketplace might.
As Beleutz emphasizes, this interplay underscores the need for investors to adopt a more panoramic view, understanding both the forest and the trees.
Regarding decisions made by central banks worldwide, these have played a critical role in shaping asset management.
Monetary policies like quantitative easing can have far-reaching implications for various asset classes. Quantitative easing involves central banks buying assets in the open market; further liquidity can be injected into the economy, indirectly impacting life settlements.
Beleutz and his team are keenly aware of these influences, and they strategically position their portfolio to navigate the effects of any policy changes.
Still, he shares, “As an asset, life settlements offer a reasonable buffer against the volatility introduced by central bank decisions. This allows their inherent stability and low correlation with traditional markets.”
In these unpredictable times, Beleutz’s insights have the potential to provide a clear path forward. While economic shifts may bring challenges, they also have opportunities for those willing to look beyond the conventional.
With AIR Asset Management and its expert team led by Beleutz, the potential of life settlements as a stable investment option becomes increasingly evident. Often overlooked asset classes may be the key to unlocking success in the turbulent economic waters — with confidence.