Schroders launches ILS fund

Schroders has launched its first insurance-linked securities fund after acquiring a 30% stake in Secquaero Advisors in June.

The SIF Core Insurance Linked Securities fund will invest in both catastrophe bonds and other insurance-linked securities (ILS) instruments linked to natural catastrophes such as hurricanes and earthquakes and other risks such as ‘man-made’ risks (aviation, marine, offshore energy), but not in life insurance risks.Lead fund manager Daniel Ineichen said ILS was an attractive proposition and offered a compelling investment case for pension funds, sovereign wealth funds and family offices.He added: 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 will oversee a 16-strong specialised ILS team across Schroders and Switzerland-based Secquaero Advisors. Secquaero will also act as advisers on security selection, strategy and risk management. and will target institutional investors such as pension funds, sovereign wealth funds and family offices.