SINGAPORE
(March 01, 2012) - Eurekahedge, a market leading alternative fund data
provider, announced today that they have launched a new hedge fund
index focusing on insurance linked securities, in partnership with ILS
Advisers. The new index is named the ‘Eurekahedge ILS Advisers Index’.
The index can be found at:
Increasing
amounts of government intervention in worldwide financial markets has
created an unprecedented correlation amongst asset classes, increased
volatility and a tougher environment for skill based managers to
generate superior risk adjusted returns. In a very real sense the pool
of hedge funds that can perform in today’s environment has diminished.
Insurance linked securities funds on the other hand are bucking the
trend enabling fund managers to preserve capital while producing
month-on-month absolute returns.
Robust Returns
Investing US$1 million in the following 3 indices at the end of
December 2006 would have yielded the following gains over the last five
years:
Index
|
Return
|
Eurekahedge ILS Advisers Index
|
US$1,397,115
|
Mizuho-Eurekahedge Index - USD
|
US$1,241,638
|
MSCI All Countries World Index (local)
|
US$ 777,413
|
Downside protection
Equity
markets were severely affected during the financial crisis between May
2008 and February 2009. The MSCI All Countries World Index fell 46%
over this period and has yet to recover. The Mizuho-Eurekahedge Index fell 17% and took almost 2 years to recover. In contrast, ILS funds returned, on average, 1% to their investors.
Even
major catastrophes, which have a direct effect on the insurance market,
have had a minimal impacted upon the index. The Tōhoku earthquake and
tsunami that occurred in Japan, in March 2011 (which could be classed
financially as a Lehman-style event for the ILS industry) caused the Eurekahedge ILS Advisers Index to fall 3% - a comparatively nominal amount. Impressively, the index recovered that loss within 6 months.
Uncorrelated returns
Insurance linked securities funds are largely uncorrelated to hedge
fund returns and thus provide an attractive avenue of diversification
for investors looking for a more balanced portfolio. The Mizuho-Eurekahedge Index and the MSCI All Countries World Index share a strong correlation (R2 of 0.64). The Eurekahedge ILS Advisers Index registers virtually no correlation with the Mizuho-Eurekahedge and MSCI indices (R2 of 0.11 and 0.1 respectively).
Volatility comparisons
About the index
The Eurekahedge ILS Advisers Index as an equally weighted index of
hedge funds that explicitly allocate to insurance linked investments
and have at least 70% of their portfolio invested in non-life risk. The
index was incepted in December 2005 and has returned 52.38% through
January 2012. The index has an annualised return of 7.17% and an
extremely low volatility, producing one of the highest Sharpe ratios of
all of Eurekahedge indices at 2.27.
How insurance linked securities work
Insurance linked securities (ILS) also known as catastrophe or cat
bonds are a transfer of insurance risk to the capital markets typically
by insurance or reinsurance companies. The performance of ILS depends
on the occurence respectively non-occurrence of an insured event. ILS
show a low correlation with traditional asset classes and other
alternative investment as shown above. ILS are typically not exposed to
duration risk or interest rate risk since their return consists of a
variable interest rate component plus an insurance premium for the risk
assumed. Moreover they protect investors against inflation. Typically
the ILS funds diversify their exposure across different perils such as
natural catastrophe (wind, earthquake), man made risk and across
different geographies US, Europe and Asia.
Notes for editors
Quotes
“Eurekahedge
is delighted to be working with ILS Advisers on this new project. We
both share the same vision of being at the cutting edge of innovative
investment opportunities for sophisticated investors and with the
launch of our new index we hope to bring more exposure to this fresh
asset class.” said Alexander Mearns, CEO of Eurekahedge.
Mr
Mearns goes on to say, “In the current market environment trying to
find superior risk adjusted returns is like looking for black cats in a
coal mine. Insurance linked securities hedge funds are those cats!”
“The
launch of the Eurekahedge ILS Advisers Index shows our commitment, to
identify and monitor the best ILS managers globally and bring them to
professional investors in Asia”, says Stefan Kräuchi co-founder of ILS
Advisers.
“The
new index combines the expertise of ILS Advisers in the insurance
linked investment space with the know-how, experience and reputation of
Eurekahedge as the top index provider in the alternative investment
area. A perfect match”, says Stefan Kräuchi, co-founder of ILS Advisers.
“The
new index will bring additional interest to an asset class that is
still barely known in Asia despite its stellar track record over the
last ten years with high yield bond like returns, a volatility of less
than high grade corporate bonds and no negative year”, says Stefan
Kräuchi.
About ILS Advisers
ILS Advisers was founded in Hong Kong by Stefan K. Kräuchi and
Hansrudolf Schmid in 2011 as part of HSZ (Hong Kong) Ltd. an
independent asset manager regulated by the SFC. The two founders
combine over 40 years of industry and management experience on top
level of major financial institutions.
The
purpose of ILS Advisers is to develop the Asian market for Insurance
Linked Investments. ILS Advisers are strictly an independent investment
consultant and not managing nor selling own products.
ILS
Advisers identify and monitor the best ILS managers and products
globally and bring them to professional investors in Asia. ILS Advisers
help clients to understand the asset class, support them in their
selection and investment process and provide ongoing services once the
investments are made. Target clients are Asian domiciled institutional
investors such as Sovereign Wealth Funds (SWF), Pension Funds, Banks,
Corporate Treasuries, Family Offices and Fund-of-Funds.
Stefan
K. Kräuchi has over 20 years of international experience in the in the
asset management industry with UBS, AIG Investments (now PineBridge)
and Credit Suisse Group in Zurich, Tokyo and Chicago. In his previous
role he was a member of the Executive Board of a large Swiss private
bank, where he was in charge of the products and services division with
assets under management of over USD 20bn including insurance linked
investments of over USD 2bn. Since 2004 he has been instrumental in
pioneering and developing products in the ILS space for the Swiss and
European market.
Hansrudolf
Schmid is the founder and president of HSZ Group. After an education in
law he pursued his career in finance, covering investment banking,
private banking and investment management, first in New York followed
by Zurich and Hong Kong.
Further Information on ILS Advisers can be found at
About Eurekahedge
Founded in 2001, Eurekahedge is an independent financial data and
research company focusing on alternative investments. Eurekahedge
maintains coverage on 26,000 alternative funds globally and its
research covers hedge funds, funds of funds, UCITS III hedge funds,
private equity funds, Islamic funds, real estate funds, SRI funds and
long-only absolute return funds.
In
addition to fund data Eurekahedge publishes the world’s largest suite
of over 250 alternative investment benchmark indices, and the widely
read The Eurekahedge Report, a monthly look at the alternative funds industry’s asset flows, fund performance, macroeconomic trends and league tables.
Eurekahedge has offices in Singapore and New York. Eurekahedge is owned
by Mizuho Corporate Bank, Ltd. (“Mizuho”), which owns a 95% stake in
the company.
For further information, please contact:
Sultan Arif
Head of Marketing & Communications
+65 6212 0930
Alexander Mearns
Chief Executive Officer
+65 6212 0925
Eurekahedge Pte Ltd
Level 4,
101C Telok Ayer Street
Singapore
068574
+65 6212 0900
Ms. Joey Tang
Media Liaison
Phone: +852 2287 2300
Stefan K. Kräuchi
Partner
Phone: +852 2287 2303
ILS Advisers
Unit 605A, 6/F, Tower 2
Lippo Centre, 89 Queensway
Admiralty, Hong Kong
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