The proposition, introduced on 31 October, will be run by Fermat Capital Management, a specialist institutional investor in catastrophe bonds with $2.2bn in assets under management.
The GAM Star Cat Bond aims to deliver stable returns that are not correlated to either equity or fixed income products. It will invest in securitised insurance risks via a portfolio of between 40 and 50 catastrophe bonds, the underlying exposure of which will be to different and very specific risks.
Announcing the launch, the company said: “The underlying bonds transfer the remote risk of natural disasters from reinsurers to the capital markets and offer higher yields compared to similarly rated traditional securities.
“Returns from these bonds are driven by the absence of well-defined, extreme natural events. Their performance is therefore largely independent of financial market behaviour, and consequently they have a very low correlation to traditional asset classes even in times of crisis.”
It is a Dublin-domiciled Ucits fund that deals three times per month.