A zombie fund (more formally known as a closed fund) is a colloquial expression for a
with-profits life insurance
Life insurance (or life assurance, especially in the Commonwealth of Nations) is a contract
A contract is an agreement that specifies certain legally enforceable rights and obligations pertaining to two or more parties. A contract typical ...
fund that is closed to new business. It is therefore running off its portfolio of insurance liabilities, but not issuing new policies, until the final policy matures, which may be many years into the future.
In some cases, closed funds will at some point merge with other life insurance funds, or be transferred to another company, in order to achieve
economies of scale
In microeconomics, economies of scale are the cost advantages that enterprises obtain due to their scale of operation, and are typically measured by the amount of Productivity, output produced per unit of cost (production cost). A decrease in ...
.
Closed funds can attract negative coverage, as in the case of
Resolution plc
Resolution plc was a UK insurance company headquartered in the City of London. It was listed on the London Stock Exchange and was once a constituent of the FTSE 100 Index but was acquired by the Pearl Group in May 2008.
History
Early history ...
.
The term might also refer to an
investment fund
An investment fund is a way of investment, investing money alongside other investors in order to benefit from the inherent advantages of working as part of a group such as reducing the risks of the investment by a significant percentage. These ad ...
, typically a
private equity fund
A private equity fund (abbreviated as PE fund) is a collective investment scheme used for making investments in various equity (and to a lesser extent debt) securities according to one of the investment strategies associated with private equity.
...
or a hedge fund, that continues to exist but no longer actively manages investments or generates meaningful returns for its investors.
References
Types of insurance
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