ILS funds deliver “particularly high” 1.16% return for January 2024

The average return of insurance-linked securities (ILS) funds tracked by the Eurekahedge ILS Advisers Index reached 1.16% for January 2024, which was a “particularly high” performance for what is often a slower month lacking in peak peril seasonality.

With this Index having delivered a return for full-year 2023 of 14.11%, the new year has started off particularly well though, beating any other January since 2007.

Especially strong demand for catastrophe bonds has continued to drive cat bond prices and therefore fund returns higher than perhaps expected for the time of year.

That helped pure cat bond funds outpace the private ILS funds that invest in collateralised reinsurance and retrocession, for the first month of the year.

The Eurekahedge ILS Advisers Index returned 1.16% for January 2024, but pure cat bond funds did slightly better than the average at 1.2%.

The private ILS fund cohort returned an average of 1.13% for the month, with no major catastrophe loss impacts to dent performance.

As a result, all of the ILS funds represented in the ILS Advisers Index delivered a positive return for the month.

ILS fund performance ranged from +0.34% to +1.89% for January 2024, while the overall Index return was the highest for any January since 2007.

This shows that ILS and cat bond returns remain near the highs achieved a year ago, although it is going to be interesting to see how this develops across the year.

ILS Advisers noted that January was a very good month to start the year, for ILS investors.

“This is particularly high for a month which bears less natural catastrophe risk as the wind-storm risk is low at this time of the year,” the company explained.

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.