‘CAT’ bond fund brings in the scratch

Pioneer Investments today launched the Pioneer Diversified High Income Trust. It is a closed-end fund that invests in catastrophe bonds. Usually, insurance providers issue “CAT” bonds to cut down their losses in the event of a disaster, such as a hurricane or an earthquake. This fund includes these bonds as part of a diversified portfolio that includes other debt securities. Initial asset allocation will include 37.5% in global high-yield bonds, 37.5% in floating rate loans and 25% in event-linked catastrophe bonds. The Pioneer Diversified High Income Trust sold 7.3 million shares, raising $182.5 million in gross assets through an initial public offering managed by UBS Securities LLC. Total assets, which include financial leverage, should reach around $260 million. The f shares began trading on the American Stock Exchange today under the ticker HNW. Andrew Feltus, portfolio manager of Pioneer Global High Yield Fund, will manage the global high-yield portion of the fund. Meanwhile, Jonathan D. Sharkey, portfolio manager of Pioneer Floating Rate Trust, will handle the floating bank loan component. Overall asset-allocation decisions will be made by vice president Charles Melchreit, portfolio manager of Pioneer Government Income Fund and Pioneer Short Term Income Fund.