Andrew Poreda, Vice President, Senior Research Analyst at Sage Advisory Services, the fixed income and alternative solutions manager, has highlighted in a new report that catastrophe bonds are superior financial instruments across many risk metrics, with the analyst particularly flagging how they offer diversification to investors when they need it most.
Sage Advisory is still relatively new to the insurance-linked securities (ILS) space, as the firm ventured into the market for the first time last year through its partnership with Cedar Trace Group, the Bermuda-based insurance, reinsurance and asset management specialist, that sees the two companies working together to create and deliver ILS-enhanced credit opportunities to investors.
In the firm’s latest report, Poreda explains that typically most portfolios look diversified, but in practice, they are still driven by the same underlying risks: equity risk, credit risk, and interest rate risk. All of which show up in different forms, such as public vs. private, fixed vs. floating, however when things default, they tend to do so all together.
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