An Australian catastrophe insurance-linked securities fund has attracted an initial $30 million investment from NGS Super.

US-based Fermat Capital Management and Brookvine in Australia set up the Fermat ILS Yield Fund, with Brookvine marketing the fund to local institutional investors.

Fermat, founded in 2001, is one of the largest catastrophe bond managers, with more than $US2 billion ($1.98 billion) under management.

Brookvine CEO Steven Hall told insuranceNEWS.com.au the fund is open-ended with a $5 million minimum investment.

“We are talking to institutional investors about the fund, including super funds,” he said.

Mr Hall says his company has been working with Fermat in Australia and New Zealand for two years to create a catastrophe bond fund for the local market.

“The work required to establish an Australian-registered managed investment scheme in this field was complicated and resource-intensive,” he said. “But we firmly believe the ability to deliver innovative investment solutions in the form most readily accepted by local investors warrants the effort.

“It will be attractive for investors looking for higher yields in their portfolios. The long-term return will be about 4.5% above the Australian cash rate.”

NGS Super CEO Anthony Rodwell-Ball says the fund is always looking for innovative investments for the fund.

“Insurance-linked securities has been an area of particular interest for some time,” he said. “We are particularly attracted to the diversification benefits it provides and the possibility of the sorts of double-digit yields that have been realised in the past.”

Last year, Fermat delivered a 13.59% return on its catastrophe bond products in the US.

NGS Super has more than 100,000 members in education and community-focused organisations. It has about $4.4 billion in investments.