Twelve Capital, the Zurich headquartered insurance and reinsurance linked investment fund manager, has almost doubled the size of its flagship UCITS catastrophe bond fund in a year.
At the end of January 2020, the insurance-linked securities (ILS) fund manager had reported that the Twelve Capital’s Cat Bond UCITS fund had reached $550 million in assets under management.
Now, Twelve Capital said that the UCITS fund exceeds $1 billion, while its overall catastrophe bond assets under management have exceeded $2 billion.
Recent investor inflows have assisted in the strong cat bond fund growth for Twelve Capital, which will have helped the manager take advantage of the record issuance of the last year.
In addition, having capital inflows at this time means Twelve Capital’s cat bond fund will have been able to invest in the higher-yielding cat bond issuance of the last six months or more, where risk-adjusted returns have increased on cat bonds, especially through the second-half of 2020.
That means the Twelve Capital cat bond portfolio has likely seen its return profile improve, with higher-yielding new issuance added without increasing the level of risk.
Urs Ramseier, CEO and co-founder of Twelve Capital, commented on the continued cat bond investment management success, “The Cat Bond UCITS offering has always been a cornerstone of our product range. Twelve is continuously investing to further improve its investment process and extend its knowledge on relevant topics, such as climate change or ESG. The performance achieved across products in different market phases highlights the benefit of investing across an insurer’s balance sheet, as it enables the identification of industry trends early on.”
Florian Steiger, portfolio manager responsible for Twelve Capital’s cat bond strategy, also said, “During the general market volatility in 2020, Cat Bonds have again proven the benefit of investing into an asset class that exhibits only minimal correlation to equity or credit markets. As spreads are still attractive, we expect further growth of the Cat Bond strategy in the coming months.”
Twelve Capital also began to market its UCITS cat bond fund strategy in Australia and New Zealand in the last year.
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