Amundi Asset Management US, Inc. (Amundi US) is on the market and launching its first pure risk bond mutual fund strategy, another indication of how attractive the cat bond investment market is.
Amundi US is preparing to launch the Pioneer CAT Bond Fund, a mutual fund registered under the Investment Company Act of 1940.
The strategy will be a non-diversified, open-ended management investment company, available to investors through financial intermediaries or directly through the managing Pioneer Fund entity.
The investment manager is best known for its interval style mutual fund, the Pioneer ILS Interval Fund, which provides investors with a variety of opportunities to allocate capital to a variety of insurance instruments, including sidecars and quota shares, other privately-insured reinsurance opportunities, and mortgage bonds.
Amundi US also invests in ILS instruments, including cat bonds, in a variety of asset strategies and had a total of approximately $2 billion in ILS assets as of mid-2022, of which $900 million was held in lieu. Style mutual fund structure.
But this new pioneer CAT bond fund launch appears to be the first strategy to have a separate cat bond-oriented mandate from the manager.
Under normal circumstances, at least 80% of the net assets of the new Pioneer CAT Bond Fund will be allocated to catastrophe bonds.
These can include cat bonds that are exposed to mortality and longevity risks and exposure to the most common natural disaster event.
There is some flexibility for portfolio managers as the fund can invest in other insurance-linked securities (ILS) and insurance instruments to meet this 80% test.
But cat bond investments will be the focus, making it the first such strategy for Amundi US.
Environmental, social and corporate governance (ESG) considerations are incorporated into the investment process used by the portfolio management team.
The PM’s team includes the same executives who manage other Amundi US ILS strategies, including Chin Liu, MD and Director of Insurance Link Securities and Fixed Income Solutions and Director of Amundi US Responsible Investment Research, as well as Campbell Brown’s Vice President at Amundi America.
The timing of the launch is likely to be favorable as the risk bond market returns to an upward trend and the profile of the cat bond investment space is increasing.