ILS fund gains accelerate, cat bonds particularly strong. Average August return 1.39%: ILS Advisers

Insurance-linked securities investment fund strategies, across catastrophe bonds and private ILS, saw returns accelerating in August 2026, as the average ILS fund performance reached 1.39% and cat bond funds had a particularly strong month, latest data from the ILS Advisers Fund Index shows.

August 2026 now becomes the best-performing month of the year so far for the ILS fund marketplace.

ILS fund returns have been rising with seasonality through the summer, driven by premiums earned through the Atlantic hurricane season and the increase accelerated last month, ILS Advisers data shows.

For August 2026, ILS Advisers reports the average return across its index constituent ILS funds was 1.39%, which now becomes the best month of the year and the strongest single month of ILS fund performance since October 2025 for this Index.

For 2026, August’s performance lifts the average ILS fund return for the year so far to 6.56%, which continues to run at a slightly above average level despite the softening of the reinsurance market.

Interestingly, August 2026 was an exceptional month of performance for pure catastrophe bond funds, as seasonality and price dynamics in the market drove a higher-than-anticipated average cat bond fund return.

Pure cat bond funds as a group delivered a 1.42% return for August 2026, compared to the group of funds that also invest in private ILS, such as collateralised reinsurance arrangements, which averaged 1.34% for the month.

It’s a big jump from July’s pure cat bond fund average return of 0.95%, while private ILS funds rose 1.23% in that month.

ILS Advisers commented on cat bond price and return performance in August 2026, saying, “The secondary market, meanwhile, continues to be supported by strong investor demand and limited supply, creating a favorable technical environment for cat bond prices.

“With no significant loss events, cat bond prices gained 1.33% in August, delivering a 2.22% total return for the Swiss Re Global Cat Bond Index.”

With 84% of manager ILS fund strategies currently having reported their performance for August 2026, there is still some data to collect but it won’t detract from the strong month ILS funds have seen.

Every one of the ILS funds reported for so far have delivered positive performance in August, while returns ranged from 0.50% to as high as 2.17%.

Which is a relatively wide gap, but even the lowest volatility fund still delivered a 0.50% return, which shows just how strong a month it was for the ILS fund sector.

You can track the ILS Advisers Fund Index here on Artemis. It comprises an equally weighted index of 37 constituent insurance-linked investment funds which tracks their performance and is the first benchmark that allows a comparison between different insurance-linked securities fund managers in the ILS, reinsurance-linked and catastrophe bond investment space.