The Schroder GAIA Cat Bond Fund invests a minimum of 80% of its portfolio globally in catastrophe bonds and other tradeable insurance-linked securities, primarily in regions with a high concentration of insured wealth such as the US, Western Europe and Japan.
The manager is Daniel Ineichen, who has run the NGAR Secquaero ILS Fund since inception in May 2011. As from today this existing fund merges with the Schroder GAIA Cat Bond.
Ineichen said: “The floating rate structure of cat bonds provides protection against rising interest rates, which is a widely acknowledged investor concern.”
The fund’s outperformance target is three month USD Libor plus 6% pa net of fees and it seeks to generate total returns with a low correlation to traditional assets.
Research and modelling for insurance-linked securities primarily takes place at Secquaero Advisors.
The portfolios are actively managed by Schroders’ investment desk in Zurich, while cat bonds and currency (for hedging) trading is executed by the fixed income and foreign exchange trading desks in London.
GAIA (Global Alternative Investor Access) is a regulated platform for Ucits funds designed to give investors easier access to hedge funds.
Schroders has seven funds on the platform, five managed by external hedge fund managers (Schroder GAIA CQS Credit, Schroder GAIA Egerton Equity, Schroder GAIA Sirios US Equity, the recently announced Schroder GAIA Avoca Credit (launching on 7 November) and the newly added Schroder GAIA Cat Bond) and two managed internally (Schroder GAIA Global Macro Bond and Schroder GAIA QEP Global Absolute).
Catastrophe bonds are mainly linked to natural catastrophes such as hurricanes and earthquakes but also, to a lesser extent, man-made risks in the aviation and offshore energy industries.
