"World’s First Catastrophe-Bond ETF Falters in ‘Crazy’ Market"

No good can come of this product.

Retail investors might see a year or two of dandy "uncorrelated" returns, the other Wall Street marketeers will roll out their competing offerings and wham! 

The only positive is that the market is small enough that there won't be any systemic fallout. We on the other hand...

From Bloomberg, April 25:

The world’s first-ever exchange-traded fund based on catastrophe bonds has failed to get the seed capital it expected after launching on the eve of the Trump administration’s tariff war.

“Some of our seed capital investors are sitting on the sidelines because the market turmoil has taken people’s eyes off new asset classes,” said Ethan Powell, chief investment officer of Texas-based Brookmont Capital Management LLC, which oversees the fund. “It’s a crazy environment,” and “we don’t want to be too pushy right now.”

The Brookmont Catastrophic Bond ETF (Ticker: ILS US), which began trading on the New York Stock Exchange on April 1, is intended to make one of the most esoteric corners of the bond market more accessible to regular investors. The bonds have consistently generated market-beating returns in recent years, with record issuance levels turning the asset class into a $50 billion market.

Catastrophe bonds, which last year returned 17% after rising a record 20% in 2023, are issued by insurers looking for ways to pass on part of their risk to the capital markets. Investors can be on the hook for large sums if a natural disaster such as a hurricane hits, but stand to make sizable profits if it doesn’t. Loss probabilities are dictated by highly calibrated terms that set narrow windows for when investors need to fork out payments.

In recent years, the bonds have managed to clock in gains despite being exposed to a series of major hurricanes. And as other asset classes slumped during this month’s market turmoil, so-called cat bonds were among the few financial instruments that were unscathed by the wider selloff.

But the securities can be a hard sell for retail investors who have never before had to price the risk of a typhoon or earthquake.

“The misconception is that you’re bailing out insurers and not being properly compensated for the risk,” Powell said. “The asset class does itself no favors by having ‘catastrophe’ in the name.”....

....MORE

On the other hand, here at Obscure Perils Group our custom small-batch artisanal offerings are sure to fill those gaps in your portfolio you weren't even aware existed. 

As mentioned in "And In Other Volcano News: More than 120,000 flee Bali’s Mt Agung volcano":

...Volcano insurance?
Why yes stranger.
The state of Washington wants everyone to know about "Volcano coverage for your home and auto"  

The major property/casualty insurer State Farm has a page devoted to "How Volcano Damage is Covered on Your Insurance"

Here's a testimonial:

Peter: "No, no, no. I read about this in a book once."
Brian: "You sure it was a book? You sure it wasn't nothing?"

Salesman: "How about I let you in on something every home owner needs: VOLCANO INSURANCE!
Now, I have an uncle that knows a lot about volcanoes, and he says a volcano is coming THIS WAY."

Peter: "But we've never had any trouble with volcanoes." 

Salesman: "Well don't you think we're due for one?"

Peter (thinking): Touche, salesman. I too have an uncle.
Peter: Come in....

And a reminder, despite the Large Hadron Collider not being much in the news these days we remain an agent for Long or Short Capital's  End of the Universe puts in the event CERN goes all whack. Some previous marketing material:

 CERN Cranks LHC To 11 In Bid To Find Parallel Universes

Regarding the puts, we have attempted to quote their action (reaction) with each CERN announcement since the machine was turned on back in 2008:

Should CERN have to really crank up the Large Hadron Collider we will make every effort to offer Long or Short Capital's proprietary "End of the Universe Puts":

Back when the LHC was supposed to fire up the first time, we mentioned Long or Short Capital's End of the Universe puts:

...That is why Long or Short is now offering LHC End of the Universe Puts. It’s a simple put option wherein the buyer retains the write to sell the Universe at a strike price of “Existing”. Based on our Black-Holes model used to value all “end of the world” options, the July 2008 vintage options are currently priced at $20....

Followed by "Large Hadron Collider Starts Up, Earth Suvives, End of the World Puts Plummet":

UPDATE: The marketers at LoS Capital* are still pushing product:

...We continue to reiterate the importance of LHC End of the Universe Puts.

“The LHC is a discovery machine,” said CERN Director General Robert Aymar

If this is true and you extrapolate it out, it is only a matter of time until they discover the end of the Earth and existence as we know it. Who is to say they won’t do that tomorrow? Again, not us. 

Recommendation: These securities do NOT benefit from the implicit guarantee of the US government, God or your locally relevant deity. Wink wink nudge nudge, but between you and me, they DO.

*At Long or Short LLC, we leverage our superior intellect and extensive investing experience to recommend explicit Long or Short positions and related abstract trades, which may or may not be possible with real world financial derivatives. We use science to improve the lives of the rich.
More About LoS

From - Baguette breaks Large Hadron Collider (End of the Universe Puts Trade Down)

Also - CERN: Light Once Again Faster then Neutrinos, Problem May Have Been a Loose Cable

Don't you hate it when that happens? A bad connection and all of a sudden you're calling Einstein a moron.
From CERN:...