Stewards & Partners of Bermuda is launching a unique and innovative investment fund for international investors.

The fund invests in US health-care receivables which produces a stable, but good return for investors.

Founding Partners Global Fund has been tested with US-based non-tax payers and the company feels it has proved itself sufficiently to take it to the international market of institutional and high net worth individual investors.

The fund is designed to produce an annualised return, net of fees and expenses, of about 15 percent.

Bill Gunlicks, president and chief executive officer, said: "We wanted a fund that was not as volatile as the markets, something stable, but with low risk.

"We wanted to find an asset class that has an absolute rate of return but is not influenced by the equity class.

"We identified that as health-care receivables.'' In the US, an industry has developed that plugs the time and cash flow gap between the point an invoice is submitted by a doctor or health-care provider and the three to four months before payment is received by them from the government or health insurance company.

An intermediary company, a factor, purchases the amount due from the insurance and forwards this to the health-care provider.

The factor makes its money from charging a fee, but traditionally had to borrow the money from banks. This amount and the contract to pay is known as a receivable.

Global Fund places investors' money in these receivables by lending it to the factor for a fee.

But it only lends where they are the payment obligation of investment grade insurance companies or US government health-care agencies such as Medicare or Medicaid.

It has been estimated that the health-care industry in the US is worth around $1.3 trillion.

The main reasons that health-care providers take advantage of funding from health-care receivables are: to improve the consistency of their cash flow; to increase the overall percentage of billings they collect; and to decrease the interval between the time they provide the service and the time they are paid for it.

The lender, in this case the fund, lends money to designated health-care receivable funding companies, the factors.

It is cheaper for the factors to borrow money in this way rather than go the banks.

They can charge three percent per month, instead of a bank rate of about ten percent, for the service they provide to the health-care provider.

Global Fund may not be able to place all the investors' money in health-care receivables.

The availability of health-care receivables that meet the fund's strict investment grade criteria, and the timing of the funding, fluctuates from month to month.

Any excess investors' money is placed in a money market account which can cause a slight fluctuation in returns.

The company's US fund, Founding Partners Multi-Strategy Fund, follows the same investment principles and has demonstrated a fluctuation in monthly annualised returns.

For example, in January this year the investment mix was 71 percent health-care receivables and 29 percent money market and produced a return of 11.1 percent.

In February the mix was 93 percent health-care receivables and seven percent money market and the return rose to 15 percent.

"Now we have seen it working and the audits have been done we are launching the Global Fund for international investors,'' said Mr. Gunlicks.

"No one else has been able to structure a fund in this way to make it available for international investors. In its trial period in the US the fund went in five months from $500,000 to $20 million.

Stewards & Partners expects a large response from the international market now the fund is tried and tested.