This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Pioneer Fund Lets You Bet on the Weather

Last year, hedge funds made a mint betting that hurricanes wouldn't make landfall on the Atlantic coast of the U.S. Now small investors have a shot.

Pioneer Investments recently launched a closed-end mutual fund, the (HNW) Diversified High Income Trust (HNW), that can invest as much as 35% of assets in catastrophe bonds.

Catastrophe bonds, also known as "cat bonds" or insurance-linked securities, allow investors to bet on whether hurricanes and other natural disasters will strike and cause large insurance claims. They are typically issued by insurers or reinsurers who are looking for ways to offset some of their own exposure.

These investments carry big risks -- you can lose your entire investment, including the principal, if specific triggers are met and insurers are allowed to tap the money to pay damage claims. But they can also pay big returns. Interest rates on cat bonds soared after three major hurricanes battered the southeastern U.S. in 2005. But investors cashed in big time when the 2006 hurricane season turned out to be the mildest in years.

This year's hurricane season, which begins June 1, is expected to be much more severe: The National Hurricane Conference is calling for between seven and nine major hurricanes and 17 named storms. It says there is a 74% chance a major hurricane will hit the East Coast. So anyone buying cat bonds now is betting that forecasters will get it wrong again.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $126.45 0.03%
FB $79.88 -1.60%
GOOG $567.83 -1.30%
TSLA $192.68 -4.00%
YHOO $43.54 -1.40%

Markets

DOW 17,843.84 -291.88 -1.61%
S&P 500 2,072.98 -28.06 -1.34%
NASDAQ 4,930.3720 -52.4370 -1.05%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs