According to a new report from King Ridge Capital Advisors (KRCA), catastrophe bonds are offering more opportunities for bond and multi-asset fund managers to diversify their portfolios, reduce correlations and improve risk-adjusted returns.
“Fixed income securities have long been a foundational building block of conservative investment strategies, providing stability and predictability. In recent years, consistently low bond yields, combined with escalating inflation and interest rates, along with increasing correlations with equities, have sparked concerns about bonds’ capacity to effectively diversify portfolios and reduce risk,” KRCA said.
“In light of these market dynamics, portfolio managers and asset allocators are actively seeking alternative sources of yield and diversification. CAT Bonds (Catastrophe Bonds), a subset of Insurance-Linked Securities (ILS), may be a compelling yet overlooked asset class.”
FULL ORIGINAL PUBLICATION HERE
