The increasing trend for pools of traded life policies to be securitised is likely to yield enhanced profits for banks but reduce returns for investors, according to an academic report to be released today.

In recent years a series of open-ended funds investing in TLPs – the second-hand life assurance policies of elderly and dying Americans – have been established, typically generating annual returns of 8-10 per cent. However, Merlin Stone, professor of marketing at the UK’s Bristol Business School, has argued the trend for US and European banks to securitise parcels of TLPs, rather than hold them in open-ended funds, “is fraught with risks for unwitting institutional investors”.