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Catastrophe bonds could offer investors diversification in a low-yield environment
Cat bonds can offer high returns and low correlation to financial markets but few hedge funds are active in the market despite increased interest in this asset class over the last 18 months.
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In an environment where investors are searching desperately for yields and hedge funds are struggling to achieve uncorrelated returns, an investment that has a track record of delivering high returns with almost no correlation to financial markets sounds like a perfect solution.
These attractive qualities have pushed an increasing number of institutions to turn to the catastrophe (cat) bond market.
The attractions of cat bonds have led to a flurry of hedge funds entering the market over the past
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