Cat bond, it is catastrophe bond.

Today I have come across a new investment product and it is catastrophe bond. These are  kind of insurance product and are among the very few securities that appear to have genuinely little correlation with broader financial markets.

The returns have also been strong. As measured by a Swiss Re index, the bonds have produced annualised returns of 8.4 per cent since 2002, handily outperforming the 6.3 per cent returned by US stocks. 
When these risky securities appeared, only specialist hedge funds or other asset managers with expert knowledge of disaster risk dared buy them, meaning the market was small compared with the reinsurance world at large. In the past couple of years it has swelled dramatically, however, with a record $4.75bn cat bonds issued in the first four months of 2014 alone. And mainstream investors have jumped in: last year about four-fifths of the bonds were bought by pension funds and other large institutional managers.Market of these bonds have been increasing until recently, Cat bonds Investors shows their limit.