Insurance-linked securities (ILS) such as catastrophe bonds are seen as a versatile and adaptable diversifying strategy that can can provide investors strong, reliable return potential, particularly on a risk-adjusted basis, the Liquid Diversifiers team at WTW has said.
Likening the construction of a well-rounded investment portfolio to that of selecting a winning football team, the WTW experts explain that choosing “complementary skills can help maximize diversification benefits in investment portfolios.”
“Investors need to think harder about their starting line-up. On one hand, they face more global market risks and uncertainties than ever before. On the other, diversifiers such as the once-reliable negative correlation between bonds and equities can no longer be taken for granted,” they commented.
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