Hedge Funds

Katrina likely to spare cat bond investors


While the financial and human toll of the devastation wrought by Hurricane Katrina is still being calculated, experts say the storm is unlikely to harm hedge funds invested in catastrophe bonds.

Many outstanding bonds offering exposure to hurricane risks are likely to include insurance policies related to Gulf Coast areas affected by Katrina, according to analysts at S&P, but the bonds are typically weighted more heavily to property and casualty insurance policies related to events in Florida and Texas.

The bonds are also structured in such a way that makes it extremely rare for investors to experience a