Insurance-Linked Securities (ILS)
The Tenax ILS Fund is a UCITS-compliant vehicle that invests in catastrophe (cat-) bonds exposed to events such as hurricanes, earthquakes, and floods. Cat bonds are uncorrelated with global financial markets, as the only performance drivers are insurance losses from natural events. ILS have provided a source of income in a consistently low volatility fashion, making it historically one of the best asset classes in terms of Sharpe ratio.
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Our team focuses on investments where they view the reliability and transparency of catastrophe risk modelling is strongest, aiming to both minimise the effect of secondary/new perils and increase pricing efficiency. We do not invest in risks with exposure to life/mortality, pandemic, war, terrorism, and nuclear.
What are Insurance-Linked Securities (ILS)
ILS are an asset class that offer demonstrated diversification from traditional financial markets and the broader economy.
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The Tenax ILS UCITS Fund invests in the most liquid form of ILS, Catastrophe (Cat) Bonds.
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Cat Bonds are floating rate notes that can protect investors against inflation and interest rate shocks.
Active Management
Compared to some of our peers, we are smaller in size. In our view, this is an advantage because we are not forced to buy all of the cat bonds in the market (around 200 in total). We screen and select deals which we believe will generate superior returns at acceptable risk levels. We strive to outperform our peers with a nimble and fluid approach.
Advanced Risk Analysis
We have several proprietary models, from pricing to those that analyse weather data in real time. We analyse the impact that each peril has on the portfolio and yield. Moreover, we assess the impact of stochastic and historical events on the portfolio as well as pinpointing areas where climate change is projected to have a disproportionate impact.
Portfolio Construction
We utilise both the primary and secondary market and always adopt a fluid strategy depending on where we are in the pricing cycle and market conditions. Our proprietary models allow us to analyse secondary market deals quickly and respond when opportunities present themselves.