UCITS cat bond funds – a growing part of the insurance-linked securities asset class
With catastrophe bond issuance strong over the last few years, reaching a record level in 2021 and continuing apace in 2022 and accelerating into 2023, the cat bond investment fund market has grown to support this expanding issuance.
As a result, the main UCITS catastrophe bond funds have been growing rapidly, with some experiencing particularly rapid expansion of their cat bond assets under management.
At the end of the third-quarter of 2023, the assets under management (AuM) of the main UCITS cat bond fund strategies fell slightly to just over US $9.95 billion.
The figure had reached a high of almost US $10.4 billion by the end of the first-half of 2023, but some outflows, currency effects and also the lack of new investment opportunities during the wind season, served to shrink the asset base of the UCITS cat bond funds as a group in the third-quarter.
UCITS cat bond fund assets under management are still up by more than 13% since the end of 2022, while the largest three funds as a group have grown roughly 11% over the same period, to end of Q3 2023. AUM then recovered somewhat to reach just over $10 billion against by the end of October 2023.
UCITS catastrophe bond fund assets under management – By year
Our first chart displays the assets under management of UCITS catastrophe bond funds by year, with all figures cited as of year-end. In addition, the current year is updated on a quarterly basis, so this figure is accurate to the end of the prior quarter.
UCITS catastrophe bond fund assets under management – By month
Our second chart on UCITS cat bond fund AuM displays the total by month, which makes for a more granular view of UCITS catastrophe bond fund sector growth.
This by month view, also enables you to see periods where UCITS cat bond fund AuM may have dipped due to catastrophe loss activity, or because of outflows (including outflows during the early months of the COVID-19 pandemic). It also shows more clearly periods of more significant investor inflow to the UCITS cat bond fund sector.