Plenum Investments, the specialist manager of catastrophe bond and other reinsurance-linked assets, has successfully grown its Plenum CAT Bond Dynamic fund to greater 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 attain 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 never simply reflecting the CAT bond market.

“That’s why we put money into granular, independent risks within the US wind segment. CAT bonds which might be exposed to secondary risks and that aggregate damage over a certain period are reduced to a minimum.

“In this fashion, we achieve a high level of diversification in our fund and, despite the limited size of the investment universe, are capable of select positions with high risk compensation and low correlation with one another.”

David Strasser, senior portfolio manager and liable for modeling, added, “In an already limited market segment selectivity may be guaranteed only by limiting the investment capability of the fund to a maximum of USD 650 million which represents roughly 1.5% of the present market volume. It is a clear commitment to our customers.”

Schmelzer further stated, “Investors are increasingly understanding that the fund volume within the CAT bond market is a critical success factor and that the investment volume have to be adjusted to that of the area of interest investment universe. The Plenum CAT Bond Dynamic fund is an exclusive investment fund that represents a leap in quality within the high-yielding CAT bond fund segment. It’s a response to the incontrovertible fact that capability with a few of the existing funds within 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 a substitute 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 each geopolitical and trade policy risks are increasing, due to this fact the expansion of the CAT bond market is more likely to proceed.”