Amundi US to launch Pioneer CAT Bond mutual fund

Amundi Asset Management US, Inc. (Amundi US) is in the process of marketing and launching its first pure catastrophe bond mutual fund strategy, which is another signal of just how attractive the cat bond investment market is right now.

Amundi US is preparing to launch the Pioneer CAT Bond Fund as a mutual fund registered under the Investment Company Act of 1940.

The strategy will be a non-diversified, open-end management investment company, available to investors through financial intermediaries or direct via the manager’s Pioneer Funds entity.

The investment manager is better known for its interval style mutual fund, the Pioneer ILS Interval Fund, which allocates investor capital to opportunities across a range of reinsurance instruments, including sidecars and quota shares, other private collateralized reinsurance opportunities and catastrophe bonds.

Amundi US also invests in ILS instruments, including cat bonds, within a range of multi-asset strategies and overall had around $2 billion in ILS assets under its management at the mid-point of 2022, around $900 million of which was held in the interval style mutual fund structure.

But this new Pioneer CAT Bond Fund launch appears to be the first strategy from the manager to have a specific cat bond focused mandate.

Under normal circumstances, at least 80% of the net assets of the new Pioneer CAT Bond Fund will be allocated to be invested into catastrophe bonds.

These can include cat bonds exposed to mortality and longevity risks, as well as the more common natural catastrophe event exposure.

There is some flexibility available to the portfolio managers, as the fund can invest in other insurance-linked securities (ILS) and reinsurance instruments to meet this 80% test, should market conditions make that more appropriate.

But cat bond investments will clearly be the focus, making this the first such strategy for Amundi US.

Environmental, social and corporate governance (ESG) considerations will be integrated into the investment process used by the portfolio management team.

The PM team are the same executives that manage the other Amundi US ILS strategies, Chin Liu, MD and Director of Insurance-Linked Securities, and Director of Fixed Income Solutions and Responsible Investment Research of Amundi US, as well as Campbell Brown, Vice President at Amundi US.

The timing of the launch may be opportune, given the upwards shift in catastrophe bond market returns and increasing profile of the cat bond investments space.