The GAM Investments operated Star Cat Bond Fund UCITS strategy saw its catastrophe bond assets under management rise at the latest reporting of net asset values, halting a decline that began after ending its long relationship with the fund’s previous portfolio manager, Fermat Capital Management.As we reported at the time, a new partnership with reinsurance giant Swiss Re’s registered investment advisor unit, Swiss Re Insurance-Linked Investment Advisors Corporation (SRILIAC), who would take over management of its catastrophe bond and insurance-linked securities (ILS) fund strategies.The announcement revealed that Swiss Re was lined up to become co-investment manager of GAM’s ILS fund range, including the GAM Star Cat Bond UCITS Fund, as from May 7th, but Fermat Capital Management, the incumbent portfolio manager for GAM’s cat bond funds, said it had not been consulted on the termination of its investment management partnership with GAM.We also learned that investors in the GAM ILS fund only learned of the change in investment manager on the same date, of April 7th.

What ensued was seemingly one of the most significant shifts in catastrophe bond fund assets under management ever seen.The GAM Star Cat Bond Fund strategy experienced a meaningful outflow of investor capital, resulting in the UCITS fund’s assets under management .At March 31st, the GAM operated UCITS catastrophe bond fund strategy counted assets under management (AUM) of almost US $2.57 billion, but that total net asset figure dived to just under US $1.92 billion by the end of April.

The decline had continued as well, with the GAM Star Cat Bond Fund seeing its AUM drop to just under US $1.63 billion by May 12th 2025.At which stage the cat bond fund had shrunk by almost 37% between the end of March and May 12th, a roughly US $938.5 million decline in assets for the GAM Star Cat Bond Fund.But, it appears that GAM has now halted the decline, as the UCITS cat bond fund’s assets have risen to just over US $1.8 billion as of net asset value reporting at May 27th.

That will be welcomed by the asset manager.Given opportunities to grow continue in the catastrophe bond market, thanks to strong issuance persisting, while some funds have become a little more cautious about managing their size in recent weeks.There is perhaps now an opportunity for GAM to add a little more in AUM before the hurricane season begins and primary cat bond issuance dries up.

Of course, there would also be secondary market opportunities through the wind season, but that is not typically a source of meaningful growth for cat bond fund managers, unless there are some larger sales of cat bond notes that emerge (although bidding could be competitive in a time when there is not so much new paper available).We can, of course, speculate about where the assets have gone and the obvious candidate would be the Fermat Capital Management owned Fermat UCITS Cat Bond Fund.Fermat’s UCITS cat bond fund counted almost US $803 million in AUM as of March 31st this year.

But, this cat bond fund has grown considerably to a new high of US $1.58 billion as of the latest net asset value this week.Based on the NAV data we’ve seen, the Fermat UCITS Cat Bond Fund grew by almost US $775 million from March 31st to this week, with the strategy expanding by a stunning 97% as a result.It seems likely that Fermat has been a beneficiary, as some of the investors in the GAM cat bond fund it had managed for two decades may have opted to move across to the manager’s own UCITS fund strategy.

Positively for the catastrophe bond fund industry as a whole, it seems the majority of the assets that moved out of GAM’s fund have likely stayed within the sector, with growth also seen at a number of other UCITS cat bond fund managers in recent weeks.GAM now has a chance to build on assets held within its UCITS cat bond fund strategy and continue this recent growth under the portfolio management stewardship of Swiss Re Insurance-Linked Investment Advisors Corporation over the rest of this year..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

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