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The Arm Guaranteed Income fund, guaranteed by Commerzbank, will provide a 7.05 per cent annual return from the senior life settlements market - the name given to the secondary market for life insurance policies.

Eamonn Ling, head of investment at Catalyst, said the addition of the guaranteed income fund to its Arm range would broaden its current offering, which includes the Arm Capital Growth Bond and the Arm Assured Income Plan.

Ling said the asset class offered investors a low-risk product with low correlation to conventional markets.

"The whole market is becoming more attuned to the senior life settlement market as an investment vehicle and as an asset class.

"We have built the product in response to client demand - what we haven’t done is build a product and hope people buy it."

Ling said the fund had also raised interest from euro and dollar-based investors outside the UK who are looking to take advantage of low sterling values.

"Sterling assets are looking quite cheap - investors see the sterling component as an asset, as well as the return," he said.

"People are hoping sterling is at a historic low against the dollar and the euro."

The fund will invest in two Commerzbank-issued financial instruments - one guaranteeing annual income, the other tracking the performance of other senior life settlement policies.

Initial investment in the fund is £30,000, which is not protected. But the fund aims to deliver a 100 per cent return of capital at the end of the nine-year term.

The company said it aimed to distribute the fund itself though IFAs and was open to investment through tax-free vehicles including Sipps, Ssas, and Isas and Peps.

The annual charge for the fund is 1.45 per cent. The initial charge of 5 per cent is included in the £1,000 subscription price.

The fund also has a performance fee of 25 per cent on any capital return over the initial capital invested.