Amundi Pioneer seeks to add second ILS interval fund share class

by Artemis on May 17, 2018

Asset management giant Amundi Pioneer Investment Management is seeking to add a second share class to its expanding U.S. mutual fund insurance-linked securities and reinsurance linked investment strategy, the Pioneer ILS Interval Fund, which would help to broaden its appeal to investors.

In a filing with the SEC, Amundi Pioneer Asset Management, Inc. requests an order from the U.S. Securities and Exchange Commission to permit the Pioneer ILS Interval Fund to issue multiple share classes, with different terms on each class.

This would allow the manager to appeal to a broader range of investors and also distributors, by tailoring the charges and fees for each share class in order to suit the source of capital.

As well as the request for multiple share classes, the manager is also seeking to be able to impose early withdrawal charges and asset-based distribution and/or service fees on share classes.

The ability to tailor these to the needs of different groups of investors could help Amundi Pioneer increase the assets of its reinsurance linked interval fund more rapidly, by broadening distribution opportunities.

The manager would like to offer Class 1 and Class 2 shares, with the former being the current common shares in issuance for the ILS Interval Fund.

Each share class would have its own fee and expense structure, which Amundi Pioneer explains in more detail.

The Class 1 shares would not be subject to a front-end sales charge, Class 2 shares may be. Class 1 shares will be subject to other expenses, but not a distribution fee or service fee, while Class 2  will be subject to a distribution and service fee as well as other expenses.

Currently neither class of share would be subject to an early withdrawal fee, but the filing requests the ability to be able to apply one in future to either share class.

An early withdrawal fee would be another way to help guarantee the permanence of the capital in the interval ILS and reinsurance linked investment fund, which is key for asset managers, particularly in mutual funds where lock-ups are not as restrictive as in the majority of ILS funds.

The move, if approved, will offer the manager greater flexibility for distribution opportunities, as well as greater control over outflows as well.

The Pioneer ILS Interval Fund expanded its reinsurance linked assets under management to $676 million as of the end of January 2018.

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