Zurich-based catastrophe bond and insurance-linked securities investment manager Plenum Investments has announced that its flagship Plenum CAT Bond Fund has been approved for public distribution in the Netherlands and Luxembourg.
Plenum’s flagship largely catastrophe bond only investment strategy, a UCITS IV mutual fund, has been approved in both countries for public distribution to investors. The CAT Bond Fund offers its investors weekly liquidity opportunities in USD, EUR, CHF and YEN share classes.
Plenum said that the minimum investment in its CAT Bond Fund is one unit and it will be targeting pension plans and other large investors with the fiscally transparent.
“CAT bonds are an excellent diversifier in multi-asset portfolios. Their performance is primarily linked to insured events. Therefore the performance is not exposed to the risk of changing interest rates or correlated to the fluctuation of equity prices. We have seen insurance premiums coming down for quite a while now. However, given the overall pressure on yields by the central banks we still see attractive risk compensation in the asset class,” explained Dr. Rainer Grünig, CEO Plenum Investments AG.
The fund invests in securitized insurance and reinsurance risks, with a broadly diversified strategy. The primary investable asset in the portfolio is catastrophe bonds, with an investment focus on wind and earthquake risks in developed regions, such as the southeastern part of the United States, Western Europe or Japan. The fund targets a conservative return 4.0% above money market rates.
Broadening the range of countries the fund is able to be publicly distributed in will help Plenum to attract new interest from investors it perhaps has not encountered before. With the insurance-linked investment market growing and competition rising, reach and scale is increasingly important for ILS funds who need access to new investors to attract ever greater amounts of capital.