Swiss Re Insurance-Linked Fund Management

Xactanalysis Insights and PCS

GAM to operate waiting list on subscriptions to catastrophe bond fund


Investment manager GAM have announced that they are going to be operating a waiting list on new subscriptions to their GAM Star Cat Bond fund due to capacity constraints in the sector. The UCITS-compliant fund which launched in Q4 last year has apparently been seeing strong investor demand and it seems that this demand has continued into the seasonal lull in primary market catastrophe bond issuance meaning that capacity is constrained by the lack of new cat bonds for the fund managers to invest in.

As a result of the slowdown in available cat bond capacity GAM are imposing revised subscription arrangements for access to the GAM Star Cat Bond fund. The new arrangements are expected to be temporary in nature and GAM say are being put in place to maintain integrity in the investment strategy and preserve the interests of investors.

A waiting list will be operated on new subscriptions and any capacity that becomes available will be allocated to those on this list. GAM expects some capacity will become available over the summer months but don’t expect to be able to lift the restrictions until primary cat bond market issuance levels pick up later this year.

GAM says that capacity constraints are likely to be eased by the fourth quarter of the year when net new catastrophe bond issuance picks up. Once issuance is available to invest in the fund manager will lift the restrictions provided they are confident that market conditions can support the increase in investor capital inflow and that their clients assets can be appropriately invested.

Given the volume of issuance seen this year it is interesting that this fund is feeling the lack of capacity available at this time of year. The GAM Star Cat Bond fund is managed by Fermat Capital Management but the fund is targeted at smaller retail-type investors as it has a very low minimum investment limit. The fact that GAM have had to throttle access to the fund suggests that it has been popular among the retail investment market which is encouraging for the sector. This is one of the few opportunities in the cat bond space that non-qualified retail investors can access.

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