Investing in Longevity Risk
Longevity risk has existed as an asset class for quite some time but has primarily been the focus of larger institutions.
In a recent Financial Times article, the author discusses the recent proliferation of longevity and mortality related investment products.
The range of product options include:
- Life settlements, blocks of annuities, reverse mortgages and life tenancies.
- Longevity/Mortality swaps.
- Structured notes, including pass-through, principal protected notes, coupon protected notes and leveraged notes.
- Targeted population indices and broad population indices.
Source: Financial Times
Anonymous wrote on Thu, 11/26/2009 - 11:47:
Can you provide some examples of existing longevity indexes?
tom wrote on Thu, 11/26/2009 - 13:56:
There are a few longevity indexes.
JPMorgan has something called the LifeMetrics Index.
Credit Suisse has a longevity index.
Goldman Sachs has an index that enables trading of both longevity and mortality risks: http://www.qxx-index.com/
Anonymous wrote on Fri, 11/27/2009 - 13:22:
Are you aware of any longevity-based investment products such as mutual funds or ETFs?
tom wrote on Fri, 11/27/2009 - 14:21:
To my knowledge, no retail products that are built off of or derived from these existing indexes.
Certainly a number of institutional products that have been developed.
I suppose there are ways to capture longevity exposure indirectly through other asset classes and retail products, but a separate conversation.