A global network of forensic accountants, fraud examiners, and attorneys are used to source litigation-related opportunities which offer long-term uncorrelated returns for investors.
Litigation Finance Fund
The Ashton Global Litigation Finance Fund is a tactical opportunities portfolio focused on identifying litigation finance-related investments that offer significant upside with defined risk. The fund provides capital in exchange for a portion of the recoveries tied to various cases. All of the investments are supported by interests in legal recoveries and settlements due to plaintiffs. LOFFCO Risk Management, a risk management consultancy specializing in hedge funds and alternative investments, is the sub-advisor.
We use a network of forensic accountants, fraud examiners, and attorneys to generate alpha through litigation-related special situations. Scenario and probability analysis are used to size the portfolio’s positions to provide a balance of income generation and capital appreciation. Payouts from lawsuits bear no relation to interest-rate rises or stock market swings. Our average investment holding period is expected to be between three and five years.
Frequently Asked Questions About Litigation Finance
What is litigation finance?
Litigation finance is the provision of funds by a third party to a plaintiff in exchange for part of a legal settlement. The investor typically receives a specific multiple of the initial investment or a percentage of the settlement for a successful case.
Litigation finance was once a niche investment, but it has evolved into a multi-billion dollar industry. Often times, hedge funds, family offices, and private investors will finance law firms or plaintiff’s to pursue cases against large defendants.
Why should investors be interested?
Returns from litigation finance have been quite high, but more importantly uncorrelated with the broader market and other asset classes. The returns for litigation finance depend on the outcomes of particular court cases, which are unaffected by movements in the stock market. What is more, legal decisions are generally uncorrelated with each other.
A diversified portfolio including multiple cases can produce much more predictable returns. Litigation finance is still a relatively new asset class with room for growth. Cases frequently take three to five years to reach a settlement, and the secondary market is still developing. Litigation finance remains an extremely illiquid asset class, and “being paid to wait” is an important component of the return profile.
Who should invest in litigation finance?
Litigation finance is most appropriate for institutional investors and high-net-worth individuals because of its lack of liquidity and complex nature of modeling the variables that will make up the return, including size and timing of the settlement, and assessing the ability for the defendant to pay. Litigation finance is for sophisticated long-term investors like hedge funds and family offices.
What are the risks?
Litigation finance is considered high-risk because the investor will typically lose the entire initial investment if the plaintiff loses the case. Cases can also take much longer to play out than investors originally anticipate, which lowers the internal rate of return.
Other risks include being able to verify and value potential assets available for recovery. This is the most challenging aspect for investors. Idiosyncratic risk, conflicts of interest, lack of liquidity, and regulatory uncertainty are also risks associated with litigation finance. The high idiosyncratic risk of any specific case is the main reason that attorneys seek litigation funding. Contact us to learn more.
Proprietary screens and a global network are used to identify niche, small-cap, and event driven opportunities in international markets. Additional alpha is created through event-driven special situation, primarily in Bhutan.
A multi-strategy framework is used to identify undervalued, income generating, niche investments in East Africa. The investment manager will also target government privatizations and event-driven special situations.
An investor should consider the fund’s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information about the fund can be found in the fund’s prospectus, or, if applicable, the summary prospectus. Any decision to invest in Ashton Global funds should be made on the basis of the current prospectus, which is available on request at email@example.com. Read the prospectus carefully before investing. All investing involves risk, including potential loss of principal. There is no guarantee that the fund will achieve its objective. Investing in emerging and frontier markets can involve risks such as having less publicly available information, higher volatility, and less liquidity than in the case of developed markets. Overweighting investments in certain sectors or industries increases the risk of loss due to general declines in the prices of stocks in those sectors or industries.