Boston-based Pioneer Investments has registered a new insurance-linked securities (ILS) fund built around the increasing appetite for closed-end “interval” structures that have become popular with alternative managers looking to tap the closed-end fund market.
The Pioneer Interval ILS Fund will have a 80% core allocation to ILS, including catastrophe bonds, sidecars, collateralized reinsurance, industry loss warranties, event swaps and other “reinsurance” investments, according to a filing with the U.S. Securities and Exchange Commission (SEC) on Thursday. The no-load fund will have a 1.75% management fee and will be run by Chin Lu, vice president at Pioneer and Charles Melchreit, senior vice president of Pioneer.
Pioneer is using the new fund to jump on the increasing popularity of closed-end interval funds, which allow managers to control sell-offs in illiquid investments by limiting investors ability to cash out at certain “intervals” during a year.
The Pioneer ILS fund will offer a quarterly repurchase window of 10%, although SEC regulations allow interval fund managers to repurchase anywhere between 5% and 25% of outstanding shares at NAV, according to the filing. In addition, although Pioneer will not initially charge a repurchase fee the filing states that the “fund may in the future charge a repurchase fee of up to 2.0%.”
In 2013 Stone Ridge Asset Management launched its own reinsurance and ILS interval offering, the Stone Ridge Reinsurance Risk Premium Interval Fund. That fund is up 5.53% year to date and up 8.18% year over year, according to Bloomberg data.
A spokeswoman for Pioneer declined to comment.
