A hedge fund that last year delivered its best result ever thanks to catastrophe bonds is now scaling back its position, based on a bet that the market is headed for a rough patch.
Tenax Capital, which has a €100 million ($110 million) portfolio of insurance-linked securities — an asset class that’s dominated by catastrophe bonds — delivered an 18% return last year thanks to the strategy. Now, the fund is converting a large chunk of its stake into cash, Marco della Giacoma, who manages the portfolio, told Bloomberg.
It’s not a great time to be in cat bonds when “everyone is trying to buy, no one wants to sell,” Toby Pughe, an analyst at London-based Tenax, said in an interview.
Hedge Funds’ Mega Returns Set Off Demand Spiral for Catastrophe Bonds
Tenax is among a handful of hedge funds along with Fermat Capital Management and Tangency Capital that deliver