Hedge Fund That Rode Cat Bond Rally Mounts Tactical Retreat (1)

A hedge fund that last year delivered its best result ever thanks to catastrophe bonds is now scaling back its position, based on a bet that the market is headed for a rough patch.

Tenax Capital, which has a €100 million ($110 million) portfolio of insurance-linked securities — an asset class that’s dominated by catastrophe bonds — delivered an 18% return last year thanks to the strategy. Now, the fund is converting a large chunk of its stake into cash, Marco della Giacoma, who manages the portfolio, told Bloomberg.

It’s not a great time to be in cat ...