In focus

How ILS now offer investors more than diversification

Central bank responses to the Covid-19 crisis have put downward pressure on government bond yields while putting upward pressure on valuations of risk assets, potentially creating issues for conventional diversification strategies. 

Insurance-linked securities (ILS) can serve as an important diversification tool for investors because returns are not correlated with traditional asset classes. 

At the same time, insurance market dynamics have allowed ILS investors to benefit from rising yields. 

In the paper linked below, two of Schroders' ILS experts expain how ILS - paired with strong risk management - can improve diversification and benefit from market dislocations.