2016-05-08 - Av Henrik Sjöholm

Entropics launches unhedged share class

SEF Entropics Cat Bond Fund is now made available in an unhedged share class to institutional investors. The Fund is managed by Entropics Asset Management, the first cat bond manager in Scandinavia.

The new share class will provide uncorrelated returns by responsible investments in cat bonds and insurance linked securities (ILS) to institutional investors. The share class will have an annual management fee of 0.65% and 10% performance fee.

– The new share class will meet demand from institutional investors seeking uncorrelated returns by cat bond investments and that prefer to manage their currency hedging internally, says Robert Lindblom, CEO of Entropics.

The fund is a Luxembourg domiciled SICAV, UCITS compliant and aims to generate good uncorrelated risk adjusted returns by responsible investments in cat bonds. The Fund started in February 2015.

The Fund suffered a drawdown in 2015, as the extreme hurricane Patricia in Mexico triggered a cat bond in the portfolio but has, despite this, had a positive return of 0.13% since inception. During the same period has the global stock markets delivered -1.3% (MSCI World Index) and the global hedge fund index (HFRXGL) -5.8%. This exhibits the diversification and low correlation with traditional equity and corporate bond markets of the management.

The Fund is the first cat bond fund managed by a Nordic asset manager and among the 10 first UCITS compliant cat bond funds globally. Entropics is also committed and recognised for its style of responsible investments, based on a policy only to invest in bonds which provide benefits to society.

– Cat bonds are not only uncorrelated, but an inherently responsible asset class by providing insurance coverage to people and companies exposed to natural hazards. In many cases, cat bonds are a prerequisite for providing this coverage when the normal insurance and reinsurance markets are inadequate. Our policy emphasizes this property and excludes bonds which do not meet this standard, says Mr. Lindblom.

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