The Aussie TEP Fund

The Aussie TEP Fund is an unregistered wholesale managed investment scheme which pools Investors’ money and will invest in a portfolio of Life Policies which have an asset value and a fixed maturity date. These are known as Traded Endowment Policies (TEPs).

The Fund is only available to Wholesale investors and has a minimum application amount of $100,000.

The Fund seeks to provide Pre-Tax (grossed up returns) exceeding 3.50% pa above the 5/10 year Commonwealth Bond rate.

Background

Between 1930 and 1990, Australia’s major life companies only sold a single style of product- “conventional life insurance” policies.

These traditional policies have an asset value, (called “surrender value” by the Life Company).

TEPs are second-hand conventional life policies.

The Fund has exclusive access to TEPs in Australia under a Supply Agreement with The Outlook Group.  The Outlook Group has 20 years’ experience in sourcing TEPs for Investors. (The Fund Manager, Aussie TEP Management Pty Ltd is a member of the Outlook Group).

The Fund aims to provide attractive tax effective secure returns to investors.  Quarterly tax effective/exempt distributions are expected to commence from year 5.

Key Features of the Assets and Fund are;

TEPs:

  • “A” Credit Rated issuing Life Companies- AMP, MLC, Comminsure
  • TEP acquisition cost will generally carry 90-110% capital guarantees
  • TEPs are liquid assets that can be typically cashed within 7-10 days
  • TEPs ownership have a statutory title mandated by the Life Act 1995
  • TEPs gains are generally taxed as income with a 30% Tax Rebate or are up to 100% Tax-Free (depending on the duration)
  • TEP growth is very stable, aligning with the 5/10 year Commonwealth Bond rate and is supported by 70 years of smoothing bonus rates from the issuing life companies
  • TEPs come with an ‘In-built” IRR/yield subsidy from the original owner

The Fund:

  • Typically allows investors more liquidity options than direct TEP ownership
  • is expected provide tax-effective quarterly cashflow from year 5, (with maturing TEPs)
  • is expected to provide a mix of tax- effective and tax exempt quarterly cashflow from year 8, (with maturing TEPs)
  • The Fund has a Private Binding Tax Ruling
  • The Fund has a Supply agreement to source TEPs and technology from Australia’s only TEP source
  • No annual income to be assessed to the Fund or unitholders until TEPs mature
  • TEP purchase pricing certified by an independent Actuary

 

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