MutualFundWire.com: An 18YO TX Boutique Targets Cat Bonds

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Wednesday, April 2, 2025

An 18YO TX Boutique Targets Cat Bonds

The team at a $1-billion-AUM, employee-owned asset manager in Texas are rolling out their first ETF, and they're claiming an industry first in the process.

Ethan Powell
Brookmont Capital Management, LLC
Principal, CIO

Yesterday, Ethan Powell, principal and chief investment officer of Brookmont Capital Management, LLC (and founder of its Impact Shares affiliate), and Rick Pagnani, co-founder and CEO of King Ridge Capital Advisors LLC, unveiled the launch of the Brookmont Catastrophic Bond ETF (ILS on the NYSE Arca, Inc.). Dallas-based Brookmont serves as the new fund's investment advisor, while New London, New Hampshire-based King Ridge serves as subadvisor.

ILS is designed to provide investors exposure to catastrophe bonds, aka "cat bonds". Cat bonds are a type of insurance-linked securities (hence Brookmont's choice of the "ILS" ticker) that offer interest to the bond holders if a particular catastrophe doesn't occur but default on that and hand the principal over to the bond issuer if the catastrophe does occur. The Brookmont team lays claim to ILS being the first U.S. ETF focused exclusively on investing in cat bonds.

The inception date of ILS was March 31. The new, active fund comes with an expense ratio of 158 basis points.

The PM team for ILS includes: Vijay Manghnani, managing partner, chief underwriting officer, and CIO of King Ridge; Pagnani; and Powell.

Powell explains that the new ETF "delivers a low-correlation, high-yield alternative to traditional bonds at a time when investors are seeking new sources of income and diversification."

"Rising weather-related risks highlight the need for Cat bonds more than ever," Powell states. "This ETF invests across various natural catastrophe risks and regions, and rewards investors for supporting disaster recovery efforts while diversifying their portfolios."

Pagnani puts the launch of ILS in the context of the "immense pressure" that insurers are under.

"Cat bonds have become an essential tool for strengthening the insurance ecosystem and, with the robust growth and maturation of this market, we believe ILS will play a role in catalyzing that growth," Pagnani states.

ILS is an actively managed, non-diversified series of ETF Opportunities Trust. The new ETF's other service providers include: Citi Fund Services Ohio, Inc. as fund accountant; Citibank, N.A. as custodian, dividend disbursing agent, and transfer agent; Cohen & Company, Ltd. as independent accounting firm; Commonwealth Fund Services, Inc. as administrator; ACA's Foreside Fund Services, LLC as distributor and principal underwriter; and Practus, LLP as counsel.

Printed from: MFWire.com/story.asp?s=69729

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