Schroders has launched the Schroder GAIA Cat Bond on its UCITS platform.
GAIA (Global Alternative Investor Access) is a regulated platform for UCITS funds designed to give investors easier access to hedge funds.
The new fund invests globally in catastrophe (cat) bonds (minimum 80 per cent) and other tradable insurance-linked securities (ILS). The fund’s exposure will be primarily in regions with a high concentration of insured wealth such as the US, Western Europe and Japan.
The fund will be managed by Daniel Ineichen, who has been manager of the NGAR Secquaero ILS Fund since inception in May 2011; this fund merges into the Schroder GAIA Cat Bond today. Ineichen has been a dedicated ILS portfolio manager since joining Secquaero Advisors in December 2007 and transferred to the Schroders ILS team in June 2013. The primary objective of Schroder GAIA Cat Bond is to generate a positive performance over the medium to long-term through investing in a diversified portfolio of tradable insurance-linked instruments with a focus on cat bonds. The fund’s outperformance target is three month USD Libor plus six per cent p.a. net of fees and it seeks to generate total returns with a low correlation to traditional assets. The existing NGAR Secquaero ILS Fund has generated annualised returns of 7.27 per cent since inception.
Research and modelling for insurance-linked securities primarily takes place at Secquaero Advisors, the exclusive investment advisor to Schroders for the range of ILS strategies. The portfolios are actively managed by Schroders’ ILS investment desk in Zurich, while cat bonds and currency (for hedging) trading is executed by the fixed income and foreign exchange trading desks respectively in London.
Ineichen says: “We are very pleased to be merging the fund onto the GAIA platform, which has grown to become one of the leading UCITS distribution platforms in alternatives investment. This is an exciting asset class with a strong investment case, combining attractive returns with a low correlation to other asset classes. The floating rate structure of cat bonds provides protection against rising interest rates, which is a widely acknowledged investor concern.”
Hans-Peter Boller, managing partner and co-founder, Secquaero Advisors, says: “We have an excellent team with a wealth of experience and a strong performance record, particularly in managing tail risks so we are well positioned to offer this fund to a wider audience in the UCITS space. Beyond our experience in the insurance industry, one of our key differentiators is our proprietary portfolio management tool SPOT, with which we can analyse the impact of a new security on the overall fund and manage the risk profile of the portfolio. Given the nature of ILS, tail risk management is a key skill.”
Eric Bertrand, director, Schroder GAIA, adds: “We are constantly on the look out for high-quality managers to join Schroder GAIA as part of our due diligence process. This is an exciting partnership with a unique offering because of the combination of Schroders’ distribution framework and extensive resources in client servicing, investment support and risk management, combined with state of the art portfolio construction skills as well as Secquaero’s profound insurance knowledge and proven underwriting experience in each segment of the insurance market.”