‘CAT’ bond fund brings in the scratch

Pioneer Investments today has launched the Pioneer Diversified High Income Trust.
MAY 25, 2007
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.

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