The SEF Entropics Cat Bond Fund to be terminated. Asset manager Entropics will focus solely on its institutional management offering
SEF Entropics Cat Bond Fund is managed as a compartement in a consumer fund compliant with the European UCITS regulation. The cat bond asset class is still relatively unknown among Swedish consumers and, as the fund volume has not reached a critical level, the board of SEF SICAV in Luxembourg has decided to terminate the compartment. Entropics Asset Management has, on behalf of SEF SICAV, managed the compartment and the company will onward focus solely on an institutional management offering.
– The board of Entropics Asset Management has concluded that the demand and growth potential for Entropics is within the institutional market. Fund types for the institutional market also have a regulatory framework decreasing, for example, management and transaction costs, leaving higher returns for shareholders. The current corona crisis has clearly demonstrated the benefits of uncorrelated returns and I have been assigned by the board to fully focus on institutional asset management within our field of expertise, says Robert Lindblom, CEO of Entropics.
Entropics Asset Management is a Swedish asset manager specialized in responsible cat bond management. The company was started in 2013 and has managed a consumer subfund since 2015. The base currency of the fund is SEK, while its assets are mainly nominated in USD, and returns have throughout the years been negatively affected by currency hedging due to the interest rates between the US and Sweden. Since the inception of the compartment about five years ago, the gross return was, before currency hedging and management fees, some 16.3%. The net return in SEK during the period is some 0.3%. In the past three years, the gross return was some 8.0%, to be compared with the most used industry index Swiss Re Cat Bond TR Index which returned some 7.2% during the same period.
– The fund has, at large, fulfilled expectations, says Robert Lindblom. During the five years that we have managed the fund, we have fine-tuned our management and built a unique Swedish and Nordic competence and experience concerning cat bond management. The company has been operating during the most turbulent years ever for the asset class, the catastrophe-burdened years 2017 and 2018, and has from that learned lessons that can be applied to our management and hence further strengthen our institutional offering.
The board of SEF SICAV, comprised of members from Swedbank and Carne Group, in Luxembourg decided to terminate the fund on April 30th. The fund board decided that the compartment’s assets under management were below a level at which the fund can be managed in an economically efficient manner. Focused on the best interest of fund shareholders, the board hence decided that the compartment will commence liquidation on June 30th and that shares will be redeemed after that. The compartment no longer charges management fees and no subscriptions nor redemptions can be made until the shares are redeemed.
Supplement: Notification from the SEF SICAV fund