The most profitable hedge fund strategy last year involved investing in cat bonds, which are related to extreme weather events and not actual cats. Cat bonds are designed for rare catastrophic events like earthquakes or tsunamis, where investors receive a risk premium if these events do not occur, allowing them to keep their investment.
Today on the Big Take podcast, we visit the hedge fund with one of the world’s largest collections of catastrophe bonds, Fermat Capital Management, to see how they place their bets to get record returns. And we hear how the growing industry is helping fill a need in the global insurance market.
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