Amid ongoing market volatility institutional investors are increasingly turning to catastrophe bonds as a way to strengthen portfolio resilience, with the diversification they offer a valuable tool during times of turbulence, according to cat bond fund manager Icosa Investments AG.
“Lately, stock markets have swung wildly on every new policy announcement and international headline, reminding us how quickly investor sentiment can flip. Against this backdrop of heightened volatility, diversifying instruments like cat bonds might be an important tool for improving portfolio risk,” the firm explained in a recent commentary.
Adding: “By design, most cat bonds are linked to natural disasters. They provide essential capital to the insurance industry and help ensure communities are protected when large-scale catastrophes strike. Despite their inherent risk, many sophisticated investors continue to find value in this unique asset class.”
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