Pioneer CAT Bond Fund

The Catastrophe Bond Market

At current prices, catastrophe bonds could present an attractive entry point to the asset class

Catastrophe (CAT) bonds, a subcategory of insurance linked securities (ILS), are outcome-oriented investments with low correlation¹ to broader capital markets. Their performance is linked to non-financial events (such as earthquakes and hurricanes). Their low correlation exhibited itself throughout 2022 versus the volatility seen in traditional asset classes.

CAT bonds experience a “hardening market” when the price per unit of risk significantly increases. Even prior to the impact of Hurricane Ian, which caused massive damage to Florida in 2022, many market participants were expecting the hard market to continue. Hurricane Ian compounded an already dislocated market, inflating premiums and potentially creating one of the most disrupted markets of the past three decades. Some long-term and opportunistic ILS investors are now looking to take advantage of this dislocation.

In late 2022, Swiss Re, a leading global provider of financial backing to property & casualty insurers, announced to the broader market that they are asking their cedants (the insurance companies that hold reinsurance policies) to “double the retention,” or retain twice as much loss while also doubling the price they pay for coverage. Both of these actions are potentially positive for cat bond investors.

For Broker/Dealer Use Only. Not for use with the public.

A Word About Risk: Pioneer Cat Bond Fund

The Fund invests primarily in catastrophe bonds (CAT) and other forms of insurance-linked securities (ILS). The Fund could lose a portion or all of the principal it has invested in catastrophe bonds, and the right to additional interest and/or dividend payments with respect to the security, upon the occurrence of one or more pre-defined trigger events. Trigger events may include natural or other perils of a specific size or magnitude that occur in a designated geographic region during a specified time period, and/or that involve losses or other metrics that exceed a specific amount. The size of the ILS market may change over time, which may limit the availability of ILS for investment. The availability of ILS in the secondary market may also be limited. Investments in high yield or lower-rated securities are subject to greater-than-average price volatility, illiquidity, and possibility of default. The market price of securities may fluctuate when interest rates change. When interest rates rise, the prices of fixed income securities held by the Fund will generally fall. Conversely, when interest rates fall, the prices of fixed income securities held by the Fund will generally rise. Investments in the Fund are subject to possible loss due to the financial failure of issuers of underlying securities and their inability to meet their debt obligations. The market prices of securities may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or perceived adverse economic, political, or regulatory conditions, recessions, inflation, changes in interest or currency rates, lack of liquidity in the bond markets, the spread of infectious illness or other public health issues or adverse investor sentiment. ILS in which the Fund invests may have limited liquidity or may be illiquid and, therefore, may be impossible or difficult to purchase, sell, or unwind. Investing in foreign and/or emerging market securities involves risks relating to interest rates, currency exchange rates, and economic and political conditions. The Fund may use derivatives, such as swaps, inverse floating-rate obligations and others, which can be illiquid, may disproportionately increase losses, and have a potentially large impact on the Fund’s performance. Derivatives may have a leveraging effect. To the extent the Fund invests a significant percentage of its assets in a single industry, such as the insurance segment, the Fund may be particularly susceptible to adverse economic, regulatory or other events affecting that industry. As a non-diversified Fund, the Fund can invest a higher percentage of its assets in the securities of any one or more issuers than a diversified fund. Being non-diversified may magnify the Fund’s losses from adverse events affecting a particular issuer. Please see a prospectus for a complete discussion of the Fund’s risks.

The views expressed regarding market and economic trends are those of Amundi Asset Management US, Inc. ("Amundi US"), and are subject to change at any time. These views should not be relied upon as investment advice, as securities recommendations, or as an indication of trading intent on behalf of any portfolio. 

Individuals are encouraged to seek advice from their financial, legal, tax and other appropriate professionals before making any investment or financial decisions or purchasing any financial, securities or investment-related product or service, including any product or service described in these materials. Amundi US does not provide investment advice or investment recommendations.

Before investing, consider the product's investment objectives, risks, charges and expenses. Contact your financial professional or Amundi US for a prospectus or summary prospectus containing this information. Read it carefully. To obtain a free prospectus or summary prospectus and for information on any Pioneer fund, please download it from our  literature section.

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EXP-2025-03-12-ADID-3436293-1Y-T