Plenum exceeds $200m of assets in CAT Bond Dynamic fund

Plenum Investments, the specialist manager of catastrophe bond and other reinsurance-linked assets, has successfully grown its Plenum CAT Bond Dynamic fund to more than $200 million of assets under management.

The manager launched this higher-yielding catastrophe bond fund strategy, called the Plenum CAT Bond Dynamic Fund, back in June 2021.

The fund allocates its capital to catastrophe bonds and money market investments, with an investment objective to achieve excess returns, but with a market-like level of tail risk.

Dirk Schmelzer, Head Portfolio Manager ILS/CAT Bonds and Partner at Plenum Investments AG, commented on the news, “Quality through risk selection is our investment focus and not simply reflecting the CAT bond market.

“That’s why we invest in granular, independent risks in the US wind segment. CAT bonds that are exposed to secondary risks and that aggregate damage over a certain period are reduced to a minimum.

“In this way, we achieve a high level of diversification in our fund and, despite the limited size of the investment universe, are able to select positions with high risk compensation and low correlation with each other.”

David Strasser, senior portfolio manager and responsible for modeling, added, “In an already limited market segment selectivity can be guaranteed only by limiting the investment capacity of the fund to a maximum of USD 650 million which represents approximately 1.5% of the current market volume. This is a clear commitment to our customers.”

Schmelzer further stated, “Investors are increasingly understanding that the fund volume in the CAT bond market is a critical success factor and that the investment volume must be adjusted to that of the niche investment universe. The Plenum CAT Bond Dynamic fund is an exclusive investment fund that represents a leap in quality in the high-yielding CAT bond fund segment. It is a response to the fact that capacity with some of the existing funds in the high-yielding UCITS has reached its limit.”

Plenum believes that its cat bond fund strategies have a highly diversifying effect in multi-asset portfolios and so are well-suited as an alternative investment component.

The investment manager also said that, “While insurance premiums for CAT bonds are at historically high levels, the “hunt for return” has begun again and both geopolitical and trade policy risks are increasing, therefore the growth of the CAT bond market is likely to continue.”