Elementum Advisors, LLC, an insurance and reinsurance linked asset manager with over $4.3 billion of assets under management, has been added as a sub-advisor to a K2 Advisors managed Franklin Templeton multi-manager alternatives investment fund.
The Franklin K2 Alternative Strategies Fund has around $1.274 billion of net assets under management a portion of which is allocated to a range of non-traditional or alternative investment classes.
The fund is a multi-manager strategy, allocating its assets across well-known investment firms that act as sub-advisors to the strategy. Some of these sub-advisors are very large asset managers (such as Apollo and Wellington), but the fund also allocates to niche specialist managers that can access specific alternative sources of return.
The fund has not had an allocation to insurance-linked securities (ILS) or reinsurance linked investments to-date, but the managers at K2 Advisors have now selected and approved an allocation to this asset class.
The fund’s Board of Trustees has approved a sub-advisory agreement between K2 Advisors and Elementum Advisors, LLC, the ILS specialist manager.
Elementum is considered as a ‘relative value’ asset manager for the purposes of this alternatives fund and it’s understood that an allocation will be made to ILS through Elementum through this K2 managed fund later in 2020. As of January 2nd no allocation had yet been made.
K2 Advisors is majority owned by Franklin Templeton Investments and looks after a range of ILS allocations for strategies under its management and advisory.
K2 has been allocating to ILS since around 2008 and has done a significant amount of due-diligence across the ILS fund management space, with numerous already added to its list of approved managers.
For Elementum Advisors, becoming a sub-advisor to the Franklin branded alternatives fund will bring additional assets its way, once an allocation is made.
Sub-advisory agreements are a valuable way an ILS fund manager can broaden its distribution, piggy-backing on the reach of often much larger investment management organisations.
It’s also notable at this time that Franklin Templeton is set to acquire investment manager Legg Mason and its affiliates, in a deal announced last week that once completed will create a massive global investment management group, near-doubling Franklin Templeton’s investment pile to around $1.5 trillion of assets under management.