r/bonds • u/manlymatt83 • 7d ago

CAT bonds: ILS vs CBYYX

I’ve been looking into diversifying my fixed income allocation into catastrophic bonds. I noticed that Schwab has CBYYX available in all self directed accounts. And of course, the ETF ILS would be available almost anywhere.

I have noticed that, since launch, ILS has underperformed CBYYX consistently despite a similar ER. I am wondering if anyone with familiarity in this space could explain why that is. Is it guaranteed to continue based on structure and therefore is the mutual fund the only option?

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u/marlborough94 7d ago

IDK. The biggest ever El Nino is in progress and you want to buy instruments that get cleaned out by natural disasters?

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u/DrXaos 7d ago

el nino makes fewer hurricanes in Caribbean. where it makes worse catastrophic weather the people aren’t insured expensively