Psigma Investment Management, a wealth and investment management arm of the much larger Punter Southall Group, have invested in catastrophe bonds for the first time according to this article on Money Marketing. Psigma focus on creating bespoke investment portfolios for private clients and also offer a discretionary managed portfolio management service as well. The investment in catastrophe bonds has been made within various of their discretionary portfolios.
According to the article, a 2% position in cat bonds has been added to the Psigma balanced discretionary portfolios while other positions have been added across all other discretionary portfolios which are allowed to contain this kind of investment.
As part of the Punter Southall Group (PSG), Psigma will no doubt have been exposed to the insurance-linked securities sector previously as PSG provide a range of actuarial and investment advisory type services to pension funds. It’s interesting to see them acquire this position in cat bonds at this time as only a few weeks ago Psigma chief investment officer Tom Becket was quoted in the Financial Times recommending the GAM FCM Catastrophe Bond Fund as a good investment opportunity in the current economic climate. The FT article alludes to this being a fund that Becket and Psigma are holding a position in, so it is possibly the source of this new cat bond commitment.
The Money Marketing article quotes Becket as saying; “The current yield on catastrophe bonds we are holding is 8 per cent. You cannot get that sort of yield anywhere outside the very lowly-rated high yield credit markets, such as CCCs. This is one of the reasons why they are attractive at this time.”
We’re hearing of wealth management firms either looking at or investing in the ILS market much more frequently now, helped by the launch of funds such as the GAM cat bond range which are accessible by private retail investors who are willing to make minimum commitments. With firms like Psigma actively investing in cat bonds with the aim of enhancing their clients returns and portfolio diversification, it can only help to broaden education about ILS and catastrophe bonds as an asset class.