A New Way to Access Cat Bonds

Unlocking the Catastrophe Bond Market

As climate-related disasters increase in frequency and severity, the systemic financial risks associated with hurricanes, wildfires, and earthquakes are rising. For decades, catastrophe bonds ("Cat bonds") have provided a critical solution for insurers to transfer these risks to capital market investors. However, access to this unique asset class has largely been restricted to private markets. Until now.

The Brookmont Catastrophic Bond ETF (NYSE: ILS) offers a groundbreaking way for both institutional and individual investors to access the Cat bond market. This innovative fund is the first U.S.-listed ETF concentrated in catastrophe bonds. It provides daily liquidity, holdings transparency, and low-cost access to an asset class that has traditionally been out of reach.

Why Cat Bonds Matter Now More Than Ever

Severe weather events and natural disasters are becoming more frequent, pushing traditional insurance models to their limits. The protection gap, which is the difference between economic losses and insured losses, is widening. This increasingly leaves many individuals, corporations, states and municipalities financially vulnerable. With increased Cat bond issuance, insurers can increase their coverage while lowering their overall risk of losses and insurer geographies they otherwise would not insure. 

The Brookmont Catastrophic Bond ETF also provides investors with relatively easy access to these bonds and the opportunity to earn attractive, non-correlated returns. A diversified portfolio of Cat bonds can help mitigate the overall risk in a client portfolio since their returns are linked to randomly-occurring global natural disasters, including hurricanes, earthquakes, and wildfires and not to common economic events like most other types of securities.

Key Features of the Brookmont Catastrophic Bond ETF

• Daily Liquidity: Unlike traditional Cat Bond funds that require long lock-up periods, the ETF allows investors to buy and sell shares daily on the New York Stock Exchange.
• Diversification: The fund holds a broad mix of Cat bonds covering a range of perils across multiple geographic regions, further mitigating the impact of any single disaster.
• Expert Management: The ETF is managed by Brookmont Capital Management, with King Ridge Capital serving as sub-adviser, bringing decades of experience in the Cat Bond and reinsurance markets.

With the Brookmont Catastrophic Bond ETF (ILS), investors can now easily add this income generating, resilient asset class to their investment portfolios. As climate risks continue to escalate, this ETF can provide an essential opportunity for enhancing yield and portfolio diversification while supporting the global risk-transfer system.

Glossary: 

Catastrophe Bond: A high-yield debt instrument designed to transfer specific insurance risks from the issuer to investors, where investors receive attractive returns but risk losing part or all of their principal if a pre-defined catastrophic event (like a hurricane, earthquake, or pandemic) occurs within a specified timeframe. These bonds allow retail investors to participate in the insurance market, typically with limited correlation to traditional stocks and bonds, offering potential portfolio diversification with clearly defined risk parameters.