Welcome to Defined Return Fund & Life Settlement Strategy Fund Quarterly Review
Concerns about slowing global economic growth and the possibility of a recession in the US continued to increase risk aversion during the first quarter. Global equity markets suffered the consequences: the MSCI World Index dropped 9.53% in US dollar terms, while the S&P500 index suffered its worst first quarter in five and a half years, as investors sought safer and less volatile assets. Asian equities suffered the biggest quarterly loss since 1992, while European markets extended their decline further. The banking sector was the hardest hit, after financial institutions announced multibillion write-downs because of the subprime mortgage crisis in the US.
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Fund Strategy
During the first quarter, the Fund Managers took a series of measures to enhance the performance of Defined Return Fund.
The original Secure and Growth Share Classes are being merged with existing share classes of the same nature. The reason for merging these classes is to increase returns in the old classes and put them on an equal footing with the new classes in order to benefit from new bank lending and the positive effects of our forex hedging strategy.
The old classes have a premium reserve which caused a drag on performance. By merging them with classes that have a bank lending facility the premium reserve can be released to buy additional policies which will give a higher yield than the current cash holding.
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