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Home  »  Quoted Fund Research  »  Blue Capital Alternative Income – Uncorrelated yield opportunity

Blue Capital Alternative Income – Uncorrelated yield opportunity

31
2017
May

QuotedData is publishing an initiation note on a company in the Specialist Funds – Insurance and Reinsurance sector:

Blue Capital Alternative Income – Uncorrelated yield opportunity

Blue Capital Alternative Income Fund Limited (BCAI) helps insure the insurers, diversifying its portfolio across a range of potential catastrophes. This business is largely uncorrelated with traditional investment markets, so the fund offers investors alternative income with a yield of 6.5%. The return from inception to 31 March 2017 is 45.8% (9.1% a year). The shares trade at a discount to NAV of 7.8%. This is higher than most alternative income funds. BCAI’s managers say the discount is unwarranted, given the strength of the opportunity and its strong and stable performance. They believe that the discount offers a good entry point.

LIBOR+8% target returns

BCAI aims to offer investors target returns of LIBOR+8% via a master fund (an underlying special purpose vehicle used to hold the investments), that invests in a broad range of reinsurance risks diversified by risk, geography and peril. It currently invests in just over 1,500 different contracts from a variety of customers. No one relationship currently supplies more than 36% of invested assets for the portfolio.

US-dollar returns

The reinsurance industry is a largely US-dollar denominated one and so the Fund’s returns are earned in US-dollars. These returns are unhedged for sterling investors, who consequently face a currency risk. Despite this, BCAI has generated strong and stable returns, since inception, in sterling terms and, as the Fund’s expenses are dollar denominated there is an element of internal hedging.

170531 BCAI Initiation QD

You can access the company’s website here

BCAI : Blue Capital Alternative Income – Uncorrelated yield opportunity

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