RT Journal Article
SR Electronic
T1 Practical Applications of Understanding Cat Bonds
JF Practical Applications
FD Institutional Investor Journals
SP 1
OP 4
DO 10.3905/pa.2016.4.3.207
VO 4
IS 3
A1 Andrew J. Sterge
A1 Bernard Van der Stichele
A1 Howard Moore
YR 2017
UL https://pm-research.com/content/4/3/1.9.abstract
AB Understanding Cat Bonds Andrew J Sterge Bernard Van der Stichele Cat bonds, based on the risks of catastrophic natural events such as hurricanes or earthquakes, have provided solid returns for investors over the past decade. Is that trend likely to continue? Andrew Sterge and Bernard Van der Stichele explain that cat bond yields have fallen as a result of popularity, and they warn investors that low losses over the past 14 years have contributed a lot to the investment’s success—but that future events are unpredictable. “There is no sign of a rebound, unless heavy losses severely affect the market, which would drive away some risk-averse investors,” says Van der Stichele.However, the authors say that the bonds can still provide valuable diversification benefits, because of their low correlation to equities, fixed income, and hedge fund indexes.