Centurion Fund Managers, one of the first providers of longevity investments, those which tap longer life expectancies, has established a presence in Asia.

Centurion is partnering with a number of well-established representatives in the region, managing director David Rawson-Mackenzie, told WealthBriefingAsia exclusively, with an initial focus on Singapore and Malaysia. It has further plans to expand into other regions including Vietnam and China.

The fund manager is launching the first longevity-based structured note to meet Asian investor demand for this asset class. Centurion said the market is ripe for this type of product. In a survey the firm conducted of over 1,000 individuals in the Asian financial advice industry, 60 per cent of Asian investors want to learn more about longevity risk, and nearly half want long term investments with low market correlation, Rawson-Mackenzie said. 

The Centurion Global Population Index Structured Note is a five-year, index-linked note offering a fixed annual coupon of 5 per cent, as well as a bonus at maturity based on performance of the index. The note is the first in a series and will open for investment on 30 March 2012.

Once invested in the GPI Structured Note, the issuer and the independent safe custody agent will provide finance to a credit-worthy borrower who is able to provide quoted and/or unquoted assets as collateral.

This bonus is dependent on the performance of a Global Population Index, which reflects the actual to expected mortality experience of people over 65 in a pool of selected countries in Europe, North America and Australasia, said the firm in a statement.

The data to build the index comes from measurable and independent government sources. If the actual mortality of the GPI increases, then so does the potential return to investors. If mortality experience is lower than expected, then the initial investment is still protected.

Longevity instruments provide a hedge against parties that are exposed to longer life expectancies through their businesses, like pension plan managers and insurers. They typically have high payouts as the global population lives longer and longer. Asian investors have shown particular demand for this type of investment, said Rawson-Mackenzie.

 “Our research of Asian investors shows a strong interest in longevity investments and yet the number one reason, at 29 per cent, for not exploring it to date has been a lack of time to research the asset class properly. So we decided to take longevity to Asia in a format that is relevant to the Asian market,” said Rawson-Mackenzie.

“We think the GPI Structured Note offers an achievable steady annual return of 5 per cent that would benefit most investment portfolios and also serves to diversify away from too much equity exposure,” he added.