As per a recent report by King Ridge Capital Advisors, unlike many niche, non-credit strategies, catastrophe bonds offer diversification, differentiation and scale, which the firm suggests makes them the only non-credit income solution large enough to meet the future demands of institutional and individual investors.
The specialist insurance-linked securities (ILS) investment manager states that with global debt sitting at historic heights and monetary policy tools nearing exhaustion, today’s credit markets offer diminishing rewards while remaining tightly correlated to broader risk assets.
“Investors should reconsider not just how much income their portfolios generate, but where that income comes from. Rather than focusing solely on yield or duration, the priority should be achieving true independence from the business cycle. To create a resilient portfolio, investors should consider income streams that do not rely on the solvency of the borrower, the repression of interest rates or policy decisions of central bankers,” King Ridge explained.
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