SEF Entropics Cat Bond (Class A)
SEF Entropics Cat Bond Fund (”The Fund”) is the first fund managed by a Scandinavian asset manager specialised in investments in insurance-linked securities (ILS). Entropics has a responsible investment style.
The Fund aims at delivering good risk adjusted returns with low correlation to other asset classes, such as equity and bonds. The Fund manages a cat bond portfolio globally diversified with respect to perils and geography.
The Fund’s target return is 4-6% per annum over the risk free interest rate. The target is chosen with respect to the ambition to protect investors’ assets and to generate returns.
The Fund complies with the EU UCITS regulation. This framework aims at protecting investors through high standards for risk management, concentration risks and liquidity in compliant funds. The (I) Class is available only to institutional investors. As the Fund complies with the UCITS framework, it can be marketed to in EU countries subject to a notification procedure. Initially, the Fund is only available to institutional investors in all EU countries and on the consumer markets in Sweden and Luxembourg. The Fund can be introduced on additional markets if demand is sufficiently high.
The Fund invests according to Entropics’ policy for responsible investments.
The Fund is set up through Swedbank Management Company S.A. in Luxembourg. Swedbank AB is the Fund’s administrator, guaranteeing valuation and administration independent of Entropics. Entropics is the asset manager of the Fund, focusing on investment decisions.
In October, the positions exposed to the severe hurricanes Irma and Maria have recovered significantly for the ones exposed to Irma and to a certain extent for the ones exposed to Maria. The month’s performance is mainly a sum of the risk premiums and the market evaluation of the bonds exposed to Irma and Maria. Read more
Three large natural catastrophes in September affected the Fund’s performance. Year 2017 is set to be one of the costliest years ever for the re/insurance industry and for the cat bond market, which raises expectations of increasing risk premiums. Read more
The Fund’s August return is a result of increasing prices on the secondary market and coupon revenues. Hurricane Harvey mad landfall in Texas during the month, causing extensive flooding damages, but limited wind damages. Cat bonds have less exposure to flooding, and no cat bonds triggered. Read more
The Fund returned 0.40% in July, and the YTM is 5.54%. The performance is a result of tightening spreads and coupons. The fund has, among other things, assumed a position in the new World Bank bond covering catastrophe damages in Mexico. Activity in the secondary market has been relatively high. Read more
Seasonal adjustments for the North American hurricane season and coupon returns contributed to the fund’s returns. As the fund’s assets are mainly denominated in USD, returns are also affected by differences between American and Swedish interest rates for those classes that are secured towards Swedish Krona. Read more