Amundi Pioneer cat bond fund growing, but ILS Interval fund shrinks again

Reflecting investor sentiment and where capital is flowing to in the insurance-linked securities (ILS) market, asset manager Amundi Pioneer has been growing its new Pioneer Cat Bond Fund strategy, but the manager’s Pioneer ILS Interval Fund has continued to shrink.

As we explained last week, fund-raising continues to be more challenging in private ILS and collateralized reinsurance or retro fund strategies.

Conversely, catastrophe bond funds are growing almost across the board, as investor confidence has returned to the cat bond segment faster than the more private reinsurance contract focused investments.

Amundi Pioneer launched its first dedicated cat bond mutual fund earlier this year, the Pioneer CAT Bond Fund strategy.

In ILS, the asset manager was 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 also invests in some catastrophe bonds.

On top of this, Amundi Pioneer also allocates to ILS in a range of multi-asset alternative fund strategies, having had as much as $2 billion in ILS assets under management.

But the manager’s Interval ILS fund strategy has been shrinking, feeling the effects of loss activity and the realisation of losses in positions, as well as the change witnessed in investor preferences and flows within ILS.

But the Pioneer CAT Bond Fund has provided a new outlet for growth for the asset manager and so far the strategy has been expanding.

The Pioneer CAT Bond Fund had reached $16.6 million in assets under management (AUM) as of the end of January this year, growing further to just over $27.5 million by the end of April.

We’ve now learned that by the end of June 2023, the Pioneer CAT Bond Fund’s AUM had increased further to reach roughly $70 million.

We suspect further growth is likely as Amundi Pioneer’s ILS portfolio management team capitalise on the busy cat bond market.

Conversely, the Amunid Pioneer ILS Interval Fund has not been having so much success, continuing to shrink to a new low in assets of late.

Having had just over $860 million in total net assets at July 31st 2022, the Pioneer ILS Interval Fund shrank to $807 million by the end of October last year, then again to $752 million by the end of January 2023.

By the end of April 2023, the Interval ILS Fund’s AUM had shrunk again to just over $698 million.

It’s indicative of many private ILS fund strategies, especially some where losses have been realised through the end of 2022 and into early 2023.

The positive take from this is that the fund is likely more fully-deployed into active return-seeking assets, rather than being held in assets that were facing losses and this puts the Pioneer ILS Interval fund on a better footing going forwards, we believe.

As investor confidence returns, the forward-looking return potential for a strategy like this is now greatly improved and so we’d expect investor inflows to increase over time, with the cleaner and less loss-hampered portfolio making for a much more attractive proposition, on a forward-looking basis.