Catastrophe bond fund strategies in the UCITS format have averaged a 13.62% return for full-year 2024, according to the latest data from the Plenum CAT Bond UCITS Fund Indices.
While this is behind the record returns achieved in 2023, it remains historically very high and more than double the previous annual high of 6.28% in 2013.
Catastrophe bond funds continued to benefit from significant coupon returns generated from their investments and the fact the majority of global natural catastrophe loss events did not trouble any cat bond backed reinsurance or retrocession arrangements in 2024.
While there were some mark-to-market impacts to certain cat bonds from hurricanes Helene and Milton, the realised losses are likely to be minimal, to non-existent, for the majority of cat bond fund strategies.
While 2023 had seen the UCITS catastrophe bond fund segment deliver a higher 14.88% return for the year, it’s important to remember that mark-to-market recoveries of certain cat bond positions after hurricane Ian from September 2022 drove more than a percentage point of benefit to the majority of cat bond fund strategies that year.
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