Future Fund adds Kiskadee to alternative risk premia manager roster

by Artemis on July 29, 2016

The Future Fund, one of Australia’s sovereign wealth investment funds, has allocated capital to a second ILS fund manager by selecting Kiskadee Investment Management, the insurance-linked securities (ILS) fund and reinsurance-linked investment arm of re/insurer Hiscox.

The Future Fund is a sovereign wealth fund designed to provide the Australian government with financial support by offering unfunded superannuation liabilities, capitalised to the tune of AUD$117.3 billion, as at March 31st 2016.

After investigating the ILS and reinsurance sector as a possible asset class to add to its portfolio and subsequently selecting ILS manager Elementum in 2015, the Future Fund has now added Kiskadee to its roster of alternative risk premia focused investment managers, according to an update on the organisation’s website.

The Future Fund website reveals that Kiskadee is now one of four alternative risk premia focused investment managers selected by the organisation, with the others being Elementum, FRM Investment Managers, and SouthPeak Investment Managers.

This means that Kiskadee is now the second ILS investment undertaken by the organisation, after it revealed near the beginning of the year that via its relationship with Elementum it allocated more than $100 million to the ILS space in 2015, utilising instruments like collateralised reinsurance and catastrophe bonds.

With the addition of Kiskadee to its list of alternative risk premium focused investment managers, it’s possible that the fund’s allocation to ILS in the 2016 will continue to grow.

The fact the Future Fund has looked to strengthen and broaden its ability to allocate to the ILS space suggests it appreciates the diversification benefits and low correlation that the asset class can bring to an investment portfolio.

It will be interesting to see if the fund continues to grow its allocation to the ILS space in the coming months with the addition of Kiskadee, and just how much it now has deployed into reinsurance linked investments, as it clearly sees the value that ILS brings to its overall investment portfolio.

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