Uncorrelated income amid market uncertainty: insurance-linked securities
Insurance-linked securities have been in focus for investors thanks to their uncorrelated nature at a time of wider uncertainty and volatility - and we see the market continuing to grow in size as demand for catastrophe protection continues to increase.
Insurance-linked securities (ILS) have been a key topic of discussion this year, as volatility and uncertainty across the wider economy and global markets has intensified against a backdrop of trade tensions and geopolitical upheaval.
In this new video, Mark Gibson, Senior Investment Director at Schroders Capital, shares our perspective on current market trends, the uncorrelated benefits of insurance-linked securities, how risk management be a differentiator for managers, and the outlook for the market in 2026 and beyond.
Key points covered include:
ILS provide uncorrelated portfolio diversification, while returns have reached record highs in recent years
For the most part, ILS are only impacted by extreme natural events, which in turn are not influenced by market forces - market, credit and interest rate risks are all mitigated or not relevant
Taking an own view of risk can allow a manager to provide a more transparent view of risk and return potential - and avoid investment mistakes
Strong performance has resulted in growth in ILS AUM and a stronger bid for issued securities, which has pushed spreads back towards long-term levels - although they still remain historically attractive
Based on current pipelines we expect the market to continue to grow in 2026 - and demand for protection should maintain long-term expansion
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