Bloomberg – For Michael Mandell, running a hedge fund is a matter of life and death.
After investors pulled 90 percent of the $80 million in his New Aquarian funds starting in 2004 amid bruising competition in the industry, Mandell sought investments that hadn’t been picked over by rivals. He created a new partnership, LSF Investment Fund LLC, and entered the life insurance business.
Other U.S. hedge funds are now tapping the same well, buying policies from elderly people at a discount, paying premiums to the life insurers, then collecting the full value after the policyholder dies. As the fund firms explore new frontiers, from financing movies to buying art, the trade in so- called “life-settlements” may offer them a way to boost performance and lure investors.
