Disaster bond fund methods within the UCITS format have averaged a 13.62% return for full-year 2024, based on the newest knowledge from the Plenum CAT Bond UCITS Fund Indices.
Whereas that is behind the file returns achieved in 2023, it stays traditionally very excessive and greater than double the earlier annual excessive of 6.28% in 2013.
Disaster bond funds continued to learn from vital coupon returns generated from their investments and the very fact nearly all of world pure disaster loss occasions didn’t hassle any cat bond backed reinsurance or retrocession preparations in 2024.
Whereas there have been some mark-t0-mark impacts to sure cat bonds from hurricanes Helene and Milton, the realised losses are prone to be minimal, to non-existent, for almost all of cat bond fund methods.
Whereas 2023 had seen the UCITS disaster bond fund phase ship a better 14.88% return for the yr, it’s necessary to keep in mind that mark-to-market recoveries of sure cat bond positions after hurricane Ian from September 2022 drove greater than a share level of profit to nearly all of cat bond fund methods that yr.
In consequence, the 13.62% annual return for the closest knowledge factors to full-year 2024, so operating from December thirtieth 2023 to December twenty seventh 2024, was very spectacular and underscores the enticing returns potential in disaster bond fund investments at the moment.
The 13.62% annual return is the determine for the Grasp Common index calculated by Plenum Investments. The Grasp Capital weighted index return was 14.01% for a similar interval.
The Low-Threat common return, for UCITS disaster bond funds with a decrease anticipated loss, was 13.11%, whereas the Excessive-Threat UCITS cat bond fund index common return for 2024 was 14%.
From knowledge seen by Artemis, there have been some UCITS disaster bond fund methods that achieved a return of greater than 15% for 2024, however the majority of those UCITS cat bond fund methods appeared to vary between 11% and 14% returns for the yr.
The funds ended 2024 with a powerful efficiency for December, producing a mean return of 0.93% throughout the phase, however with the higher-risk group of UCITS cat bond funds averaging 1.12% for the interval.
As 2025 begins it is going to be fascinating to see how these disaster bond fund indices carry out, as with spreads nonetheless traditionally elevated for almost all of the excellent market there may be one other likelihood that returns are enticing by historic requirements for the cat bond asset class.
Analyse UCITS cat bond fund efficiency, utilizing the Plenum CAT Bond UCITS Fund Indices.
Analyse UCITS catastrophe bond fund assets under management using our charts here.
Analyse catastrophe bond market yields over time using this chart.
