UK-based global asset management company Schroders has rolled out its new insurance linked securities fund, designed to invest in both catastrophe bonds and other insurance-linked securities (ILS) instruments.
Dubbed as SIF1- Core Insurance Linked Securities, the fund will invest in a diversified portfolio of ILS primarily connected to natural catastrophes, including hurricanes and earthquakes and to some extent in man-made risks. The fund avoids investing in life insurance risks.
Using Schroders’ portfolio construction and risk management capabilities as well as its proprietary risk tool SPOT, the fund aims to provide attractive returns to the institutional investors.
SIF – Core Insurance Linked Securities lead fund manager Daniel Ineichen said that 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," Ineichen added.
Daniel Ineichen has been appointed to manage the SIF Core Insurance-Linked Securities Fund, with support from a 16 member specialized ILS team across Schroders and Secquaero Advisors.
As at 30 June 2013, Schroders had £255.8bn ($388bn) under management and serves pension funds, banks and insurance companies, local and public authorities, governments, charities, high net worth individuals and retail investors.