ILS fund index delivers strongest July performance ever

The broad benchmark index for insurance-linked securities (ILS) funds, the Eurekahedge ILS Advisers Index, has reported its strongest July performance on record, with ILS funds averaging 1.37% for the month.

After which the year-to-date performance for this ILS fund performance index is now the third-highest on record at this stage of the year and it appears August returns are likely to prove even higher once reported.

July 2024 saw the catastrophe bond and ILS funds tracked by the Eurekahedge ILS Advisers Index deliver an average return of 1.37%.

It beats the closest July performance considerably, being 1.03% from July 2009.

That takes the year-to-date returns of this ILS fund Index to 5.67%, which is the third highest for the first seven months of the year ever recorded.

The total return of the catastrophe bond market was one factor, being higher in July at 1.67% as recorded by Swiss Re’s cat bond index.

But so too private ILS and collateralized reinsurance strategies are delivering higher returns thanks to seasonality beginning, which helped to boost the ILS Advisers Index performance.

In fact, July was a very balanced month, with pure catastrophe bond funds averaging 1.35%, while the private ILS funds that also invest in reinsurance and retrocession delivered an average fund return of 1.38%.

For both types of fund strategies July was the strongest month of the year so far.

Year-to-date, private ILS funds are now slightly outpacing cat bond funds, but it remains very close between the two categories.

Every fund tracked by the Eurekahedge ILS Advisers Index was positive in July 2024.

While, performance ranged from +0.50% to +3.56% in the month, reflecting the diversity in ILS fund strategies that are available.

August could beat July’s high returns, we believe, with cat bond funds still riding high on elevated spreads and more seasonal premiums flowing to private ILS and reinsurance focused strategies as well.

You can track the Eurekahedge ILS Advisers Index here on Artemis, including the USD hedged version of the index. It comprises an equally weighted index of 27 constituent insurance-linked investment funds which tracks their performance and is the first benchmark that allows a comparison between different insurance-linked securities fund managers in the ILS, reinsurance-linked and catastrophe bond investment space.