Stone Ridge mutual ILS fund assets surpass $4bn for first time since 2020

New York based alternative risk premia focused investment manager Stone Ridge has now grown its mutual insurance-linked securities (ILS) fund strategy assets under management (AUM) back to above $4 billion for the first time since 2020.

Stone Ridge Asset Management has seen the combined assets across its mutual fund strategies focused on catastrophe bonds, private ILS quota shares, sidecars and collateralized reinsurance shrink to as low as $2.5 billion in 2022, but since then has been growing its cat bond fund and also the ILS component of its Diversified Alternatives strategy.

The most cat bond focused strategy, the Stone Ridge High Yield Reinsurance Risk Premium Fund, has now added an impressive $1 billion in AUM since its assets hit their lowest point in 2022.

It is cat bonds that have been the major driver of the recovery, with the overall assets of the three main mutual funds Stone Ridge manages that contain ILS instruments now having reached $4.02 billion at January 31st.

Year-on-year, to Jan 31st, the Stone Ridge Asset Management mutual ILS and reinsurance fund assets have increased by 49%.

The assets under management of the Stone Ridge mutual fund ILS investments sat slightly below $3.9 billion at October 31st 2023.

First, the 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.

At October 31st 2023, the Stone Ridge interval ILS fund counted assets under management of almost $1.2 billion, but that has fallen slightly to just under $1.1 billion at January 31st 2024.

This fund has faced redemptions over the last few years, after having experienced significant losses from catastrophe events. It has now stabilised though and remains a key source of quota share capital for many re/insurers.

Next, Stone Ridge’s High Yield Reinsurance Risk Premium Fund, which is the catastrophe bond focused investment strategy.

At October 31st 2023, this Stone Ridge cat bond focused mutual fund strategy had grown its assets to $2.32 billion and that expansion continued through the last quarter of record, to reach $2.55 billion at January 31st 2024.

We understand from sources that the expansion has continued since and that the Stone Ridge cat bond fund has grown its assets to almost $2.8 billion since January’s official filing.

Lastly, the Stone Ridge Diversified Alternatives Fund, which is a multi-strategy fund that began adding ILS investments to its portfolio in 2023.

Now, this multi-asset strategy counts roughly $390 million of ILS assets, roughly 36% of the entire fund, with catastrophe bonds the main component of that at $295 million as of January 31st 2024.

Which together takes the total mutual ILS and cat bond fund assets under management at Stone Ridge to $4.02 billion as of January 31st.

But, with the cat bond fund still growing, the figure by now is likely closer to $4.3 billion of mutual ILS fund assets, or perhaps even higher.

Of course, Stone Ridge also has a range of private ILS funds as well, plus its Longtail Re strategy, so the managers overall ILS assets under management are much higher, but visibility is lacking aside from on the 40’s Act mutual fund range.