London stock exchange listed insurance-linked securities (ILS) fund DCG Iris, operated by Dexion Capital with assets managed by the Credit Suisse ILS investment team, has now completed its first full-year and announced a total return of 4.94% for the period.
Dexion Capital has published its first annual report for the DCG Iris fun, covering the period from its date of incorporation, 24th April 2012 to 31st May 2013. While this is an annual report, DCG Iris actually didn’t issue its shares and begin full operations on the 27th June 2012.
DCG Iris launched with £40.1m of assets under management and raised that to the approximately £60.37m in assets that it has now, all of which are managed within the CS Iris Low Volatility Plus Fund by the Credit Suisse ILS investment management team so acting as a master-fund.
Since its launch in June 2012, the DCG Iris fund provided its investors an annualised NAV total return up to the 12th July 2013 of 5.02% as well as dividends of 3.5 pence per Sterling Share. Investors in the ILS fund want to see DCG Iris grow its assets under management, hence the firm is undertaking another placement of shares which it expects to complete around the 21st October.
For that new placement, DCG Iris already has interest from one of its major shareholders, telecommunications and technology firm Ericsson, to grow its holdings. Dexion Capital itself has also decided that it might invest in DCG Iris at this placement. Shares are also being offered to new investors and it will be interesting to see how much capital the fund can add.
Over the course of the year the Master Fund, Credit Suisse’s CS Iris Low Volatility Plus Fund, took two small losses. One was from a crop contract that was written off due to the U.S. drought, causing a small write down to the NAV. Superstorm Sandy also had an impact, but the expected impact has reduced significantly as industry loss estimates did not rise, and it is now estimated as 0.24% impact to the Master Fund. Both of these impacts have already been included in the current DCG Iris NAV figures.
DCG Iris has also announced another dividend to investors, of 1.25p per Sterling Share for the period 1st July 2013 to 30th September 2013 which will be payable on the 12th November 2013.
DCG Iris targets a net return of Libor +5% to 7% to investors, as well as around 5p per share in dividends per year. As the first full-year is actually only from the end of June to the next May, the return of 4.94% and dividends of 3.5 pence per share are within this range.
As a stock exchange listed ILS fund, DCG Iris is one of only a few available strategies which should appeal to specific types of investors. Interest should continue to pick up in these listed funds as investor education grows in more traditional sectors of the financial markets.
We’ll update you on the share placement from DCG Iris when the results are released in late October.