Joshua Williams Quoted in HFMWeek on Insurance Dedicated Funds
Akin Gump tax partner Joshua Williams was quoted in the HFMWeek article “The Rise of the Insurance Dedicated Fund”—something the article says has remained a very niche part of the alternatives sector for more than two decades.
An IDF, or insurance dedicated fund, as the article reports, can only take investments from insurance companies, which allocate premiums paid by the investor into the structure. “The limited partners of the fund,” Williams said, “are technically the segregated asset accounts that are owned by the insurance companies. In substance, the insurance company is actually the limited partner. It enters into a contract with the ultimate indirect owners, the annuitants, or the life insurance policyholders.”
IDF policyholders, the article reports, cannot be perceived as having any say in the underlying assets, the article reports. But, as Williams pointed out, “It’s very hard to convince a high net worth individual, which is a lot of the base here, that they should relinquish control and knowledge over their underlying investment portfolios.”
Williams added that another potential risk involves a fund’s reputation: “One of the biggest downsides: some fund sponsors don’t want to get involved in this because they view it as somewhat aggressive, the reputational aspect may reach up to the contract owners.”