During the third-quarter of 2021, global asset manager GAM Investments benefited from continued inflows to its flagship catastrophe bond fund strategy, which is managed by insurance-linked securities (ILS) specialist Fermat Capital Management.
As our readers will be only too aware, catastrophe bond investment managers have been able to increase their assets under management through late 2020 and into 2021, with investors showing an increasing appetite for the more predictable, transparent, liquid and often lower-volatility catastrophe bond segment of the ILS asset class.
Fermat Capital Management has been portfolio managing a GAM catastrophe bond fund, the UCITS compatible GAM Star CAT Bond Fund, for some years now, helping to grow the strategy to one of the largest in the marketplace.
While many UCITS cat bond funds, GAM’s included, had been shuttered to new investment capital for some years as the market had not been expanding sufficiently to open the gates, through last year and into 2021 an acceleration in cat bond issuance has helped asset managers like GAM to benefit from fresh flows.
As a result, the GAM Star Cat Bond Fund grew in size by some 31% from May 2020 through the end of May 2021, as investors were able to enter the strategy and benefit from the high-levels of new cat bond issuance seen.
As ever, things tend to slow a little over the summer months, but even through the third-quarter GAM has benefited from fresh inflows to the GAM Star Cat Bond Fund strategy.
Which means that since May the cat bond fund has added another close to 4% to surpass US $2.3 billion, which is its largest size ever recorded.
GAM reported this morning that the catastrophe bond investment fund is one bright-spot in its fixed income offering, where the asset manager recorded net outflows of CHF 0.6 billion, which it said were partially offset by inflows into the GAM Star Catastrophe Bond fund.
The Fermat Capital Management operated catastrophe bond fund strategy remains one of the most positive segments of asset flows for GAM and with a period of busy cat bond issuance expected through the end of 2021 and likely into 2022 as well, this positive opportunity to increase overall assets should continue for the asset manager.