ESG & Investing
The Hedge Fund Bet Luring Retail Investors to High-Risk Debt
- Fermat, Schroders, Amundi see large inflows in cat-bond UCITS
- EU markets regulator is now trying to assess the ramifications
A flooded street running parallel with the River Neckar in Heidelberg, Germany, on June 3.
Photographer: Alex Kraus/BloombergThere was a time when investing in catastrophe bonds was the preserve of hedge funds and other sophisticated alternative asset managers. But after underpinning the best hedge fund strategy of 2023, the bonds are finding a wider audience.
Catastrophe-bond funds marketed under Europe’s UCITS label, which is designed to protect retail investors, have seen their assets under management rise 12% this year to a record $12 billion, according to Kepler Partners, a research and advisory firm. The development means that cat bonds, as they’re often called, sold through UCITS now make up roughly a quarter of the entire market for such debt.