Boutique alternative investment specialist Hatteras Funds is set to launch a new insurance-linked securities (ILS) and reinsurance linked investment mutual fund arranged as an interval structure, becoming the latest company to offer reinsurance-linked investments to advisors and clients.
The Hatteras Reinsurance Fund, a Delaware statutory trust, has been registered with the SEC under the Investment Company Act of 1940 as a non-diversified, closed-end investment company that will operate as an interval fund.
The interval mutual fund has become a popular way to bring ILS and reinsurance linked asset returns to a broader range of high-net investors, typically with these structures being marketed through registered investment advisors, or direct to family offices and similar sophisticated investors.
The Hatteras Reinsurance Fund will invest its assets into collateralized reinsurance instruments, including catastrophe bonds, private quota share arrangements, industry loss warrants (ILW’s) and other investable reinsurance contracts.
The fund will be marketed through investment advisers and directly to family offices, investment consultants and similar entities, as Hatteras Funds seeks to bring reinsurance as an asset class to this U.S. investor audience.
Hatters Funds will not be working on this ILS and reinsurance fund strategy alone, a sub-adviser is referred to throughout the registration document for the Hatteras Reinsurance Fund but is not named.
It’s possible this sub-advisor may turn out to be a recognised ILS fund management specialist, or even a third-party capital unit of a reinsurance firm. It will likely become clear when further updates to the registration document become available from Hatteras.
Hatteras Funds specialises in offering alternative and niche strategies, including absolute return, private equity, natural resources, energy, fixed income and managed futures.
Adding a reinsurance strategy makes a lot of sense for an investment firm that already accesses the U.S. high-net worth investment market, as ILS can be an extremely attractive diversifier for this class of investors.
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