Lombard Odier Investment Managers has added to its range of liquid alternative strategies with the launch of LO Funds – CAT Bonds.
LO Funds – CAT Bonds is a new UCITS-compliant vehicle in catastrophe bonds targeting returns of the LIBOR rate plus 2 percent to 4 percent, net of fees and offering weekly liquidity.
Exposure will be primarily to regions with high concentration of insured wealth, such as US, Western Europe and Japan.
Jan Straatman, chief investment officer of Lombard Odier IM, said: “Over the next few years investors face enormous challenges with low economic growth, low yields and lots of volatility. We know our clients are looking for stable returns, income, capital preservation and lower correlation and traditional asset classes are not be able to deliver this.”
“Cat bonds meet these criteria with a higher starting yield and floating rate coupon. They are uncorrelated to traditional economic and capital markets and their return profile is related to factors such as meteorological and geological events.”
The fund will be managed by a team of insurance-linked securities (ILS) experts appointed in 2015, including, Gregor Gawron, Simon Vuille, Marc Brogli and Stephan Gaschen.
Gawron commented: “We expect the market for ILS and cat bonds to continue to grow as the insurance industry looks to cope with the ever increasing concentration of wealth in urban areas and the continuing pressure from regulators.”
