Swisscanto Launches Catastrophe Bond Fund for Portfolio Diversification

Swisscanto launches a catastrophe bond fund, instruments linked to insurance risks that offer qualified investors a diversification opportunity thanks to their low correlation with traditional equities and bonds. Management is entrusted to a specialized team and supported by a consolidated risk management framework.

Swisscanto Asset Management International expands its fixed income offering with the launch of Swisscanto (LU) Bond Fund Cat Bonds, a Luxembourg-based UCITS-compliant investment fund dedicated to catastrophe bonds (CAT Bonds). The new vehicle is aimed at qualified investors and aims to offer diversified exposure to this unique asset class, characterized by limited correlation with traditional financial markets and a potentially attractive risk-return profile even in periods of high volatility.

Catastrophe bonds are instruments through which insurance and reinsurance companies transfer part of the risks arising from extreme natural events, such as hurricanes, earthquakes, and floods, to the capital markets. Unlike traditional bonds, their returns depend primarily on the occurrence or non-occurrence of such events and are therefore less affected by equity and bond market performance. For this reason, catastrophe bonds are often used as a diversification tool within institutional portfolios.

Swisscanto’s fund aims to provide diversification through low correlation with traditional markets

The fund invests exclusively in standardized, tradable CAT bonds, aiming to offer investors liquid and transparent access to premiums associated with insurance risks. The strategy is integrated into Swisscanto Asset Management’s governance and risk management framework and is based on a model developed specifically for this type of instrument.

“We are bringing modern fixed income expertise to a highly specialized niche. We combine a proven risk model with an active relative value approach to build a diversified portfolio with exciting potential,” said Maurizio Pedrini, Head of Fixed Income at Swisscanto Asset Management.

The portfolio is managed by Karl Ruzsics, Senior Portfolio Manager of Swisscanto’s Fixed Income team since 2022, supported by Deputy Portfolio Manager Jamil Bouallai. Both have a quantitative background, which the company considers a key element for operating in the highly specialized catastrophe bond market.

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