Pioneer Investments has introduced a closed-end fund that gives investors exposure to catastrophe bonds or “cat bonds.” Cats are issued by insurers to help spread the risk of losses from natural catastrophes such as hurricanes and earthquakes.
The current portfolio of the Diversified High Income Trust (HNW) includes event-linked bonds, 25 percent; floating-rate bank loans, 37.5 percent; and global high-yield bonds, 37.5 percent. Cat bonds can represent a maximum of 35 percent of the fund’s portfolio at any given time, according to Boston-based Pioneer.
The May IPO, staged with UBS Securities, encompassed 7.3 million shares at $25 each. It raised some $185 million.
“Pioneer Investments is an industry leader in high-yield investing, and this fund is another example of our ability to provide investors with innovative approaches to this market,” says Daniel K. Kingsbury, president and CEO of Pioneer Investment Management USA. “We are giving investors exposure to a new asset class — cat bonds — within a diversified portfolio.”
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