Cyber ‘Catastrophe Bonds’ Move Step Closer to Hitting Public Debt Markets Can't wait to figure out which tail is wagging which dog here and what the systemic risks might look like.....
CDOs for cyber, anyone?
Cyber ‘Catastrophe Bonds’ Move Step Closer to Hitting Public Debt Markets
By Gautam Naik
November 12, 2023 at 8:30 AM ESTCyber catastrophe bonds may be about to move out of the shadows of private deal-making and into the public debt markets.
So-called cat bonds, which
farm out hard-to-insure risks to capital market investors in exchange for double-digit returns, have typically been built around natural disasters such as hurricanes. But as the potential fallout of business-halting cyberattacks becomes too big to insure, issuers are seizing the moment. Beazley Plc, which owns specialist insurers across Europe and the US, is exploring a potential $100 million cyber cat bond, according to Artemis, a research firm specializing in insurance-linked securities. And Axis Capital is preparing to issue a $7
5 million cyber catastrophe bond, according to a preliminary offer document seen by Bloomberg. Spokespeople for Axis Capital and Beazley declined to comment on the deals. The wider market for cat bonds is likely to reach a record $40 billion this year. A lot of that growth has been fueled by the impact of climate change, as extreme weather shocks threaten to make insurers’ business models untenable. For that reason, some of the most active players in the cat bond market are reinsurers such as Swiss Re AG and Munich Re AG. Investors have been drawn to returns that trounce those of US Treasuries. This year, the Swiss Re Global Cat Bond Performance Index is up 18%, while the Bloomberg US Treasury Index has dropped about 1%. Issuers of cyber cat bonds want to protect themselves from financial losses that can follow a major cyberattack, including lost revenue, legal fees and regulatory fines. Read More: ICBC Hit by Cyberattack, Tells Clients to Reroute Trades
Insurance-linked securities “offer corporate boards and business owners a degree of comfort over their balance sheet resilience in the event of a larger cyber event,” according to a recent report co-authored by Kathleen Faries, chief executive officer of Artex Capital Solutions.
But with limited historical data to analyze, as well as increasingly sophisticated forms of cyber crime, investors face unusually high levels of risk....< - snip - >
https://www.bloomberg.com/news/articles/2023-11-12/cyber-catastrophe-bonds-move-step-closer-to-hitting-public-debt-markets?srnd=premium
Small Caps Yes, indeed: fund managers might surprise you! My portfolio X-Ray shows:
9% in small value and
5% in small blend.
Yup. Just checked a 40/60 TRP
fund of funds I own. Its benchmark allocation for the 3 small cap stock funds it holds (including PRNHX) is about 2.7% / As of June ‘23 it was at about 2.
5%%. That doesn’t move the needle much in my case, as that holding is only 10% of portfolio. But I do own a bit over 3% inside a conglomerate / holding company which is focused in the small cap area.
Out of curiosity, checked Price’s growth oriented
fund of funds, PRSGX. Didn’t this one used to be called “Spectrum Growth”? Now it carries a different name. Anyhow, their
most recent report gives a range of 0-25% allocated to small cap funds. But the fund was holding only 10% actual as of June ‘23.
Perhaps relevant to the discussion is the possibility / desirability of investors like KHaw24 considering some good allocation funds (They come in a variety of flavors) fitting one’s risk profile and allowing the manager(s) to make those decisions? I think small caps are fertile ground for patient investors; but they can give you
whiplash over shorter periods.
Small Caps What happens in 10 or 15 years?
I like smalls, and always hold some. I wish I had owned FMIMX all that time. But it always looked so boring. M* calls it a mid-cap, but it's currently 67% small. I own some now, and I expect to buy more in the future.
I own RWJ, and I am looking at CALF. Both are on the lower end of the debt/equity ratio, as is FMIMX for that matter.
Keep in mind that any etf based on the S&P 400 will tick the small cap box for M*. In that space I own XMHQ. It also has a low D/E ratio, as do most things on my shopping list. Seems to me that the current environment encourages an eye on debt exposure.
I am keeping an eye on GRPM to see how Invesco's GARP strategy works in that space. Until recently it was an equal-weight 400 fund. I have been pleased with SPGP, which has a longer track record, but in the 500.
Buy now, or wait? I might do some early shopping in the taxable, but mostly I think I'll wait till the budget mess is settled.
The week that was, global etf's, various categories + heat map. Week ending May 17, 2024. The
graphic is set for the
5 days ending November 1, Friday; for the best to worst % returns in select etf categories. One may then also select the one month column to align the one month return best to worst; or for the other listed time frame columns.
Remain curious,
Catch
Cyber-attack. Australian ports.
T. Rowe Price Capital Appreciation and Income Fund in registration Thanks for making me aware of TCIFX! Giroux is equity and Shuggi is an equity quant and allocation guy...
[snip]
Jeff Ptak from M* asked David Giroux:
"With the benefit of hindsight, what do you think you might have urged your younger self to do and conversely, warn the younger you to refrain from doing, given all that you’ve learned along the way?"David Giroux's partial response:
"Second, I think I would tell myself to work more closely with the quantitative resources at T. Rowe earlier in my career. I really didn’t do anything on that front really until late ‘09. I joke with people internally. There was a BFS era, before Farris Shuggi, and AFS, after Farris Shuggi, period at CAF. I’ve worked very, very closely with Farris Shuggi and the rest of the quant team at T. Rowe on so many proprietary projects over the last 14 years that have really meaningfully, positively contributed to CAF’s performance. Honestly, it changed the way I managed CAF for the better over time."https://www.morningstar.com/podcasts/the-long-view/2fc42364-3773-4020-94f4-02d6b1f4e551
Small Caps Yes, indeed: fund managers might surprise you! My portfolio X-Ray shows:
9% in small value and
5% in small blend.
How much of that 14% is the result of my own single-stock selections? It almost doesn't matter, eh? If what I really want is to AVOID small caps altogether? Just, "never say never." I'm pleased with what I hold. Otherwise, why hold those things?
High Yearend Distributions Don't know about its estimated distributions, but SSgA's S&P
500 fund (SVSPX) carries a 12b-1 fee that rounds to 6 basis points (total ER of 16 basis points):
The Fund has adopted a distribution plan under Rule 12b-1 pursuant to which payments of up to 0.25% of average daily net assets may be made; however, the Fund’s Board of Trustees has determined that payments will not exceed 0.062% of average daily net assets
Prospectus:
https://www.ssga.com/us/en/individual/mf/resources/doc-viewer#svspx&prospectus
High Yearend Distributions Check out State Street S&P 500 Index Fund - Class N.
TIAA outage We are currently experiencing an operational outage with one of our vendors, and the systems are unavailable, with no estimated time for resolution. This outage could last several days. Current account values are unavailable. General product inquiries may be directed to the service center at 877-694-0305.
At the close of business on November 1, 2023, the total value ...Perhaps TIAA should have called this an outrage :-(
Small Caps 10-1
5 year time frame? But thinking of making what amounts to a
tactical decision? If you have a long range
plan in place you shouldn’t have to make this type of decision. Rather, you’d be considering rebalancing and possibly adding to beaten-up small caps - or perhaps slightly overweighting those that you already own.
To quibble a bit, I consider 10-1
5 years
intermediate term , but not
long term (20-30 years). To wit - it’s largely a matter of semantics. There’s been some discussion of small caps on the board. I’ll try to link something. Truth is - it all depends on the economy and the direction of interest rates. If rates continue to decline small caps should benefit as they need easy access to the borrowing trough and tend to borrow at higher rates.
I’d have about 3-
5% of my money tilted toward small caps myself. The thing is - When they jump … it’s often by a lot. So, if you feel like gambling, throw a little that way and let it ride. But check what you already own and make sure you’re not already exposed to the sector through some existing funds.
https://www.mutualfundobserver.com/discuss/discussion/61579/it-s-almost-time-to-buy-small-caps#latest
Small Caps @Investor Your last sentence, " In investing, perfection is the enemy of good enough returns. " What would you consider, good enough return,
5% , 10% & in what time space ? I'm sure age of investor would have something to be considered.
Thanks for your time, Derf
Small Caps Is it too early for a long term (10-15 yrs) investor to reallocate to small caps? The SCG landscape has been beaten down and some of the most reputable MF/ETFs have fallen to the middle of the pack (performance-wise). I've owned BCSIX for over 10 years and looking back, glad I took profits when I rebalanced (several times). Also, own PRNHX and the recent 3 yrs has been tough due to the Fund's aggressive nature.
Any MF/ETF's that you are considering or own?
FPA Global Equity ETF is in registration FPACX currently has 91 equity holdings,
per M*.
The predecessor ETF has a concentrated portfolio, "typically a 20-
50 position common equity portfolio", according to its
fact sheet. Its daily holdings are here:
https://fpag.fpa.com/#holdingsI haven't taken a close look at the filing(s), but a cursory glance (ERs, managers, etc.) suggests that this is merely a restructuring of the ETF. It is currently "a non-diversified series of Northern Lights Fund Trust III" and will become "a series of FPA Funds Trust" with all the legal implications that change carries. Day-to-day, current ETF and "new" version don't look different.
If you're interested, why not check out the ETF now? It's been around since December 16, 2021.
https://fpag.fpa.com//
Interactive Brokers for Mutual Funds
Wall Street up to its old games to shift risk
Great film. Loved, loved, loved the boardroom scene!
Wall Street up to its old games to shift risk
Tax brackets and income limits and standard deductions... @msf yes, you've actually stated it ACCURATELY. Thank you. That's what I meant. :).
She will have control over the money for longer, after I'm gone. She still has to wait until
59 and a half, I suppose, but her own spend-down can take lots longer, if she wants it that way--- compared to the 10-year rule for a non-spouse who inherits a T-IRA. (The
format of those Tables is nutso goofy!!!)
