Stone Ridge mutual ILS fund assets rise further, to highest level in almost five years

Stone Ridge Asset Management, the New York based alternative risk premia focused investment manager, has added more than $300 million in assets to its range of mutual insurance-linked securities (ILS) fund strategies in the last quarter of record, nearing their highest level in five years.

When we last reported on the investment managers 40’s Act compatible mutual ILS and reinsurance fund range, additional capital inflows had helped them reach a combined more than $4.4 billion in net assets across the registered funds by the end of April 2024.

One quarter further on and by the end of July 2024, the Stone Ridge Asset Management mutual ILS funds had grown again, to reach $4.72 billion at that time.

Stone Ridge has been attracting steady levels of inflows through 2024 so far to its mutual catastrophe bond and ILS focused offerings.

In fact, the combined AUM of the mutual ILS funds managed by Stone Ridge are now up by 35% year-on-year, having sat at roughly $3.5 billion as of July 31st 2023.

In just the last six months, to July 31st 2024, the manager has added $700 million in assets to these strategies, representing over 17% growth in the mutual ILS strategies.

Of course, this is not the entire ILS and reinsurance related assets under management at Stone Ridge.

As reported in September, we learned that Stone Ridge has surpassed $10 billion in cat bond, ILS and reinsurance assets across its mutual funds, its private ILS strategies and its casualty focused Longtail Re strategy.

With the mutual ILS funds now contributing over $4.72 billion of the total, they are continuing to grow as a source of assets again for Stone Ridge.

The mutual ILS fund range offered by the asset manager had shrunk to as low as roughly $2.6 billion in Q4 2022, but now they are approaching levels not seen since early 2020 and at the rate they are growing should eclipse that level by early 2025.

Stone Ridge has continued to see solid inflows into its more catastrophe bond focused Stone Ridge High Yield Reinsurance Risk Premium Fund, which has seen its AUM grow from $2.87 billion at the end of April, to almost $3.1 billion by the end of July.

It’s worth noting here that we understand further inflows have now helped the cat bond focused mutual ILS fund offered by Stone Ridge grow again to $3.25 billion as of the end of September, showing investor interest has remained strong even during the US wind season.

Next, the Stone Ridge Reinsurance Risk Premium Interval Fund, that invests across the spectrum of ILS and reinsurance-linked assets with a particular focus on sidecars and private quota shares, as well as other collateralized reinsurance arrangements and to a lesser degree catastrophe bonds, has experienced a return to growth after two stable quarters.

The interval ILS strategy had assets of $1.08 billion by April 30th this year, but this had increased to $1.14 billion by the end of July 2024.

Finally, the Stone Ridge Diversified Alternatives Fund, which is a multi-strategy fund that began adding ILS investments to its portfolio in 2023, has also continued to expand its cat bond exposure, primarily through an enlarged allocation to the more cat bond focused Stone Ridge High Yield Reinsurance Risk Premium Fund in the last quarter.

This multi-asset strategy reached approximately $500 million of ILS assets at July 31st, up from $460 million at the end of April.

The allocation this multi-strategy fund makes to Stone Ridge’s cat bond focused fund has increased, making up most of the difference. Now, around 40% of the entire multi-strategy fund is allocated to reinsurance related investments, with catastrophe bonds still the main component of that at over $402.5 million at July 31st.

It’s clear that Stone Ridge is having continued success in capital raising for these mutual ILS funds and the fact they have all increased through the wind season is positive, although there will also be a decent component of earnings helping to boost the combined assets under management of these strategies as well.

At over $10 billion, Stone Ridge remains the largest ILS asset manager, in AUM terms, featured in Artemis’ directory of insurance-linked securities (ILS) fund managers.