Catastrophe bond funds have been a shiny spot within the various UCITS funding fund area in 2023, as cat bond funds expanded strongly at a time when the broader UCITS phase skilled roughly $38 billion in outflows, in response to Kepler Absolute Hedge.
In truth, the UCITS cat bond fund sector skilled very spectacular development in 2023, with in property throughout the full-year rising 25%, or simply over $2.16 billion development in greenback phrases.
Kepler Absolute Hedge, a analysis and data-led supplier of perception into hedge fund methods, highlighted the disaster bond market as one phase that didn’t endure the outflows seen extra broadly in UCITS methods.
While the outflows did stabilise as 2023 went on, with funds solely dropping ~$2 billion to outflows in This autumn, in response to Kepler, the cat bond fund market’s development accelerated at the moment of yr, with UCITS cat bond funds including an additional 10.5% in property, or almost $1.04 billion through the fourth-quarter of 2023.
The disaster bond fund sector was an exception, in experiencing what Kepler referred to as “notable” inflows in This autumn 2023.
The truth disaster bonds are floating fee devices, so buyers profit from a roughly interest-rate linked return on collateral, in addition to the return on insurance coverage danger assumed, seemed to be a profit to the sector, as different various asset lessons suffered as buyers went elsewhere given the upper rate of interest surroundings.
Of course, cat bonds have been additionally delivering their greatest yr’s efficiency on report in 2023 as effectively, making the asset class notably engaging to buyers.
Matthew Barrett, Partner and Head of Manager Research at Kepler, commented, “2023 offered a blended image for the Alternative UCITS sector; the flows backdrop was difficult, with outflows throughout all methods, nonetheless some individual funds garnered vital inflows, and there have been a number of profitable new fund launches.
“We have tracked the Alternative UCITS sector since its infancy, and what we see today marks the ongoing maturation of the asset class as it continues to offer investors attractive diversification opportunities amid market turbulence.”
With UCITS funds remaining a core construction for a lot of buyers and disaster bond funds having delivered report returns in 2023, the sturdy curiosity and inflows are more likely to proceed, so long as the availability of cat bonds can sustain via 2024.
Analyse UCITS disaster bond fund property beneath administration utilizing our charts right here.
You may analyse UCITS cat bond fund efficiency, utilizing the Plenum CAT Bond UCITS Fund Indices.
