Regardless of the actual fact disaster bond spreads widened significantly in Could 2024, the Eurekahedge ILS Advisers Index nonetheless managed a constructive return for the month, helped by the returns of collateralised reinsurance and retrocession investments from the personal ILS funds it tracks.
Final month, the Eurekahedge ILS Advisers Index that tracks a basket of disaster bond and insurance-linked securities (ILS) funds, was additionally impacted by the cat bond unfold widening that the market had been experiencing, but still delivered a positive return of 0.51% for the month of April.
As we’ve documented though, the unfold widening was extra vital in Could and that dented many cat bond funds, leading to unfavorable months for a few of the market.
Due to this, the Eurekahedge ILS Advisers Index solely managed a constructive 0.04% return for Could 2024.
That takes the return for the primary 5 months of the yr to three.62% for the Index after Could.
It’s value noting right here, that even after slower April and Could efficiency, the return of the ILS Advisers Index to the top of Could 2024 continues to be the third highest on-record for this benchmark at this stage of the yr.
At that degree, the Index is at the moment trailing the return of the disaster bond market, as measured by Swiss Re, with that reinsurance corporations cat bond index up by 4.62% after Could.
Trying on the constituent elements of this insurance-linked securities (ILS) fund index, the pure cat bond funds as a gaggle fell to a -0.12% return for the month of Could, whereas these funds investing in personal ILS, corresponding to reinsurance and retro as nicely, managed a constructive 0.16% return for the interval.
It’s notable that Could 2024 is the primary unfavorable month for the disaster bond market since September 2022 after hurricane Ian’s landfall in Florida.
Cat bond costs fell by 1.6% throughout the market in Could, due to the unfold widening developments that had been seen.
ILS Advisers famous that 14 ILS funds represented on this Index had been unfavorable for Could 2024, whereas 12 had been constructive, reflecting the impacts of the disaster bond unfold widening that was skilled.
Throughout all 27 ILS fund methods included within the Index, month-to-month efficiency ranged from -0.78% to +0.99% for Could.
The expertise of the ILS market in Could, as cat bond unfold widening dented returns, additionally exhibits the advantages of a technique centered on different ILS and reinsurance devices as nicely, given their totally different return profiles and fundamentals.
You’ll be able to monitor the Eurekahedge ILS Advisers Index here on Artemis, together with the USD hedged model of the index. It contains an equally weighted index of 27 constituent insurance-linked funding funds which tracks their efficiency and is the primary benchmark that enables a comparability between totally different insurance-linked securities fund managers within the ILS, reinsurance-linked and disaster bond funding area.
