Market Makers Shy Away From World’s First Catastrophe Bond ETF

From cryptocurrencies to collateralized loan obligations, there aren’t many assets the US ETF market has struggled to embrace. But the $10 trillion industry may have found its limit with Wall Street’s newest arrival.

The Brookmont Catastrophic Bond ETF (ticker ILS) launches Tuesday without a lead market maker, a linchpin of the trading process who commits to quote both bid and ask prices for the fund in order to keep its shares moving.

That’s an extremely rare situation in the hyper-liquid world of exchange-traded funds, which in this case has been prompted by the niche nature of the product. ILS is ...