Stone Ridge adds another 10% to mutual ILS fund assets, reaching $3.9bn

Stone Ridge Asset Management, the New York based asset manager an alternative risk premia focus, has experienced continued asset under management growth for its mutual insurance-linked securities (ILS) fund strategies, with total AUM rising another 10% in the last quarter to reach $3.9 billion at October 31st 2023.

That is now the highest level that Stone Ridge’s mutual ILS and cat bond fund strategy AUM has been at since the middle of 2020, as the investment manager continued to attract new investor inflows through the last quarter of record.

Of course, it remains a considerable drop when compared to the almost $7 billion in assets under management (AUM) Stone Ridge managed across its two dedicated mutual ILS fund strategies back in 2018.

But, losses and changes in investor preferences saw its flagship interval ILS fund, that mainly invested across reinsurance sidecars, private collateralized reinsurance and private quota share arrangements, shrink significantly over the following years.

But, the managers catastrophe bond focused mutual ILS fund strategy is now at its largest size ever, having grown further to reach $2.32 billion as of October 31st.

As we were first to report this week, Stone Ridge’s CEO Ross Stevens revealed that the asset manager generated over $1 billion of reinsurance trading profits with its ILS strategies in 2023, while delivering stellar returns across the two main strategies.

Overall assets under management of the Stone Ridge mutual fund ILS investments has now reached almost $3.9 billion at October 31st 2023, representing a more than 10% increase since we last reported on the manager’s AUM after July’s data was reported (you can also read our end of April 2023 report on Stone Ridge’s mutual ILS fund AUM here).

Recall that it’s not just the two flagship mutual ILS funds, Stone Ridge has also been steadily adding cat bonds and other ILS investments to a multi-strategy 40’s Act fund as well.

The flagship Stone Ridge Reinsurance Risk Premium Interval Fund, that invests across the spectrum of ILS and reinsurance-linked assets with a particular focus on sidecars and private quota shares, as well as other collateralized reinsurance arrangements and to a lesser degree catastrophe bonds, was up by 45% for calendar year 2023.

At October 31st, the Stone Ridge interval ILS fund counted assets under management of almost $1.2 billion, up more than 8% in the last quarter.

Stone Ridge’s High Yield Reinsurance Risk Premium Fund, which is the catastrophe bond focused investment strategy, was up by 21% for 2023.

At October 31st, the Stone Ridge cat bond focused mutual fund strategy grew its assets to $2.32 billion, a 10% increase for the quarter.

Finally, the Stone Ridge Diversified Alternatives Fund, which is a multi-strategy fund and had counted zero catastrophe bonds or other ILS assets in its portfolio as recently as October 2022.

Now, this multi-asset strategy counts roughly $380 million of ILS assets, roughly 36% of the entire fund, with catastrophe bonds the main component of that at $285 million as of October 31st 2023.

Which together takes the total mutual ILS and cat bond fund assets under management at Stone Ridge to just under $3.9 billion as of that date.

Given the stellar performance of the Stone Ridge ILS funds through 2023, it is safe to assume that more assets will have been added in time for the key January reinsurance renewal season, as well as for the very busy catastrophe bond market pipeline towards the end of last year.

As a result, it is highly likely the assets under management of these strategies will have risen further, which we’ll update you on later this quarter.

Also read: Stone Ridge made well over $1bn in reinsurance trading profits in 2023: CEO Stevens.