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The-Global-Investor is a private client portfolio manger based in London. He also runs his own money, and enjoys doing so, free of the "house view" and risk managers.
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  • Investing In Catastrophe Bonds - The Next Big Asset Class? 0 comments
    Dec 24, 2012 1:15 AM

    Investing in Catastrophe Bonds…..possibly not the most obvious sounding asset class to invest in.

    None the less, with their near zero correlation to equity markets and the prospect of 5% plus in the form of income, investors, particulary 'yield hungry' ones are starting to consider investing in catastrophe bonds.

    The following link, shows the performance of the benchmark index for Catastrophe (NYSE:CAT) bonds:

    The benchmark index is the Swiss Re Global CAT Bond Index, which at the time of writing is up 9% year to date.

    These returns are after Hurricane Sandy, showing that one major event is not enough to destroy your returns from this asset class.

    The main advantages are: low duration risk, low credit risk, near zero correlation to equity markets and yet returns that are on a par with equity markets.

    The disadvantages are: if you invest just before a major disaster. Very few CAT bonds have gone to zero (only 2 so far), but it's still best to hold them through a fund.

    Here's a few links to find out some more:

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