Asset management group Schroders has announced the launch of its first insurance-linked securities (ILS) fund this morning. The Core Insurance Linked Securities fund has a mandate allowing it to invest in catastrophe bonds and other insurance-linked securities (ILS) instruments.
SIF (Schroders investment fund) – Core Insurance Linked Securities will invest its assets in a diversified portfolio of ILS instruments, predominantly linked to natural catastrophe risks, such as hurricane or earthquake, with some assets invested in man-made risks, such as aviation, marine and offshore energy. The fund will not invest in any life insurance risks.
This is the first Schroders ILS fund launch since it acquired 30% of specialist Switzerland based ILS and reinsurance investment manager Secquaero Advisors Limited earlier this year. At that time Schroders added ILS to its investment offerings and has since been working towards establishing this its first ILS fund.
The newly launched fund will benefit from Schroders portfolio construction and risk management skills as well as from Secquaero’s proprietary risk tool SPOT, as well as their experience and broad reach into the ILS and reinsurance market.
The new fund will be managed by Daniel Ineichen, who joined Schroders from Secquaero after the acquisition to look after ILS for the asset manager. Ineichen has over 6 years experience managing ILS portfolios and will be supported by a 16 strong specialised ILS team from across Schroders and Secquaero Advisors.
Daniel Ineichen, Lead Fund Manager of the SIF – Core Insurance Linked Securities fund, said; “We are very pleased with the launch of this fund as it is an attractive proposition for institutional investors with a compelling investment case. ILS has a low correlation with other asset classes, such as equities, bonds, real estate or the business cycle. A diversified portfolio of ILS provides attractive risk-return characteristics and excellent diversification benefits, both within a fixed income portfolio and within a broader multi-asset portfolio. Due to the fund’s ability to access a wider universe of non-life insurance risks, it provides excellent diversification and downside risk control.”
The fund is will be advised by Secquaero Advisors on issues such as selection of ILS assets, strategy and risk management. Now launched, the fund will target institutional investors such as pension funds, sovereign wealth funds and family offices.
Miles O’Connor, Head of Pan-European Institutional Distribution, commented; “This is an exciting proposition for sophisticated institutional investors as Secquaero Advisors has a wealth of experience in the ILS space and a very strong performance track record. Equally, ILS strategies offer excellent diversification benefits that should be considered in the evaluation of broader asset allocation opportunities.”