Catastrophe Bonds: An All-Weather Investment

Tuesday 09 July 2024

Cross Asset

European Equities are Favored in a Fragile Earnings Outlook

July 2024 | The reinsurance industry has existed for over 150 years, and it remains an asset class structurally uncorrelated to traditional investments. To derive the value of cat bonds, Amundi believes the asset class should be part of a strategic, long-term asset allocation. The favorable risk and return characteristics have been demonstrated in the current market environment as well as over the longer term, and there are many favorable market trends that continue to make us constructive on this asset class over the foreseeable future.

01 | We believe the catastrophe bond sector may offer attractive diversification benefits when constructing resilient portfolios because the sources of risk, return, and liquidity for the sector are structurally uncorrelated with other asset classes.

02 | There is no strong correlation between hurricane forecasts and reinsurance losses.

03 | As with many other asset classes, long-term holdings in the market tend to produce better long-term results than attempting to ‘time’ markets. This adage holds true for catastrophe bonds as well.

Catastrophe Bonds: An All-Weather Investment

Important Information

Unless otherwise stated, all information contained in this document is from Amundi Asset Management US (Amundi US) and is as of May 31, 2024. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi US and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results. Amundi Asset Management US is the US business of the Amundi Asset Management group of companies.

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