Looking for a way to revolutionize the slack returns on its pension plan investments, Pennsylvania's Public School Employees Retirement System is putting $250 million into a new high-risk fund, according to the Pocono Record.
The investment has been made in "catastrophe bonds," a series of insurance-related securities which back insurers in parts of the world prone to natural disasters.
Nephilia Capital, a Bermuda-based company, says its bonds will generate between 8 percent and 10 percent on an average year, but a major environmental disaster such as Hurricane Katrina also resulted in a 14 percent loss back in 2005.
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