Schroders launches innovative Insurance Linked Securities Fund
Schroders has announced the launch of SIF - Core Insurance Linked Securities, which has the flexibility to invest in both catastrophe bonds and other insurance-linked securities (ILS) instruments.
The Fund will invest in a diversified portfolio of ILS mainly linked to natural catastrophes such as hurricanes and earthquakes and to a lesser extent in other risks such as ‘man-made' risks (aviation, marine, offshore energy) but not in life insurance risks.
ILS is a growing asset class for sophisticated institutional investors offering highly attractive risk-return characteristics and diversification benefits within their asset allocation models. The Fund benefits from Schroders' portfolio construction and risk management skills as well as from Secquaero's proprietary risk tool SPOT and their broad network and experience across the reinsurance industry.
Daniel Ineichen, Lead Fund Manager of SIF - Core Insurance Linked Securities, said: "We are very pleased with the launch of this fund as it is an attractive proposition for institutional investors with a compelling investment case. ILS has a low correlation with other asset classes, such as equities, bonds, real estate or the business cycle. A diversified portfolio of ILS provides attractive risk-return characteristics and excellent diversification benefits, both within a fixed income portfolio and within a broader multi-asset portfolio. Due to the fund's ability to access a wider universe of non-life insurance risks, it provides excellent diversification and downside risk control."
The SIF Core Insurance-Linked Securities Fund is managed by Daniel Ineichen, who has 13 years of investment experience and over 6 years of experience in managing ILS portfolios, and will be supported by a 16 strong specialised ILS team across Schroders and Secquaero Advisors. The Fund is also advised by Secquaero Advisors Ltd on security selection, strategy and risk management and will target institutional investors such as pension funds, sovereign wealth funds and family offices.
Miles O'Connor, Head of Pan-European Institutional Distribution, said: "This is an exciting proposition for sophisticated institutional investors as Secquaero Advisors has a wealth of experience in the ILS space and a very strong performance track record. Equally, ILS strategies offer excellent diversification benefits that should be considered in the evaluation of broader asset allocation opportunities."
Schroders announced the addition of ILS to its product offering for institutional clients for the first time, following the acquisition of 30 per cent of the share capital of Secquaero Advisors Limited (Secquaero), an Insurance Linked Securities investment management business in Switzerland, in June 2013.