Pioneer grows ILS Interval Fund by 52% to $245m

by Artemis on April 4, 2017

U.S. mutual fund manager Pioneer Investments has seen a significant increase in assets under management of its Pioneer ILS Interval Fund insurance-linked securities and reinsurance linked investment strategy, with the fund’s AuM jumping 52% to $245 million by the end of January 2017.

The ILS interval style mutual fund strategy has proved a popular one, with the kind of high-net worth investors typically targeted by registered investment advisors in the United States.

Pioneer Investments, a manager with around $240 billion of assets under management globally and which was recently acquired by investment giant Amundi, launched the ILS Interval mutual fund in late 2014, as its first dedicated ILS and reinsurance linked investment fund with the strategy quickly growing in importance at the firm.

The Pioneer ILS Interval fund ended its last reporting year (to at 31st October 2016) with almost $162 million of assets under management and having achieved an impressive 11.23% return for its investors, despite the impact of catastrophe and severe weather events in 2016.

Now, after just three months, the Pioneer ILS investment team has increased the size of the ILS Interval fund by roughly 52%, with ILS assets under management at 31st January 2017 reported at almost $245 million.

That’s good growth and reflects both the increasing number of investors Pioneer has seeking access to its fund and also the increasing number of opportunities Pioneer has for investing the assets, particularly after some strong months of catastrophe bond issuance and new collateralised reinsurance sidecar launches.

Of note are investments in Liberty Mutual’s Limestone Re Ltd. reinsurance sidecar notes, the Generali sponsored Horse Capital I motor third-party liability ILS deal, Munich Re’s Eden Re II sidecar, and many other cat bonds, sidecars and private reinsurance quota-share transactions.

Sidecars and private collateralised reinsurance transactions, such as quota-shares, remain the largest component of the portfolio, with catastrophe bonds just $35 million or just over 14% of the Pioneer ILS Interval fund portfolio.

At the end of October 2016 cat bonds were just over $27 million of the portfolio, but that made up almost 17% of it, so it looks like Pioneer continues to find more opportunity in private deals and sidecars at the moment. It will be interesting to see if that changes with the uptick in cat bond issuance seen in 2017 so far.

The interval style mutual fund is an increasingly popular way to bring ILS investments to a different class of investor base and Pioneer is clearly having success in expanding its investor-base for the strategy, as well as its all-important access to risk.

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