Franklin Templeton Investment Solutions, the hedge fund-focused arm of the global asset manager, has moderated its stance on catastrophe bonds from ‘strongly overweight’ to ‘overweight’. Despite this shift, the manager maintains that the asset class remains attractive.
Meanwhile, the firm’s neutral stance on other insurance-linked securities (ILS), including private collateralized reinsurance, retrocession, and industry loss warranties (ILWs), remains unchanged.
Commenting on the cat bond market’s growth in 2025, Franklin Templeton said: “While compressing yield, robust investor demand continues. Total catastrophe (cat) bonds outstanding has grown to approximately US$60 billion at the end of December 2025, about 20% growth year-over-year (y/y). While the yield has dropped to below 9%, cat bonds remain attractive with compelling risk-adjusted returns and low correlation.”
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