U.S. mutual fund manager Pioneer Investments, which has a number of funds that include exposure to insurance-linked securities and reinsurance-linked assets, reports just under $48m of ILS assets in its recently launched Pioneer ILS Interval Fund.
Pioneer Investments launched its ILS Interval fund in late 2014, which was the managers first dedicated ILS and reinsurance linked investments fund. Prior to the launch of the ILS Interval fund Pioneer’s allocations to ILS and catastrophe bonds were split between a number of multi-asset class funds. Pioneer is said to have over $1 billion in ILS assets across the fund’s and strategies that allocate to the asset class.
Thanks to a quarterly SEC filing disclosing the portfolio of the Pioneer ILS Interval fund it is apparent that the investment manager has now raised almost $48m for the strategy.
96.8% of the capital is invested in catastrophe linked securities, largely segregated accounts containing private ILS or collateralized reinsurance, catastrophe bonds and some sidecars.
Pioneer acquired the positions for a cost of $46.018m and they are now valued at $46.348m, showing net unrealised appreciation of approximately $330,000. Another $1.5m or so is held in ‘other assets’ which will likely be cash or treasuries we’d imagine. Total assets sits at $47.874m.
The Interval fund approach has become a popular way for mutual fund managers to run ILS strategies focused on less-liquid insurance linked assets, such as private ILS, collateralized reinsurance, sidecars and quota shares.
Stone Ridge Asset Management was the first to launch an interval ILS fund, raising over $1 billion of capital for it. Pioneer was next with this ILS Interval Fund. Another interval fund is currently raising capital, the Redmond Reinsurance Investment Interval Fund, which we wrote about recently here.
By offering investors liquidity opportunities at regular intervals, the asset manager can retain some control over redemption volumes, while still leveraging the often higher return opportunities in less-liquid ILS assets.
Pioneer seems to be taking a slower approach to building its ILS Interval Fund up, it would appear. Given the current market environment and the competitive nature of ILS investments this may be a sensible approach.
Pioneer said that it would close the interval fund after its first capital raise and then open it quarterly for new inflows as demand required it. That should allow the manager to build the interval fund steadily and perhaps time its inflows with the availability of deals to allocate capital to, avoiding any need to allocate a huge sum in one go.