Alternative Fixed-Income Bonds in the Litigation Sector

Alternative Fixed-Income Bonds in the Litigation Sector

Elena Schaffter

Elena Schaffter  -  18th March 2024

Among these opportunities, alternative fixed-income bonds stand out as an attractive option – and offer unique benefits in the context of litigation. In this post, Elena Schaffter takes a deeper dive into litigation finance – read on to discover what it involves and why you should consider it.

Litigation financing is the funding of legal cases in return for a share of the proceeds

Alternative fixed-income bonds in the litigation sector, also known as litigation finance bonds, are financial instruments that allow investors to participate in the financing of legal disputes in exchange for potential returns.

These bonds are often used by law firms and parties involved in litigation to obtain financial support to cover legal fees and related expenses.

Litigation finance bonds are characterised by short timeframes

A key characteristic of alternative fixed-income bonds in the litigation field is their short maturity. Unlike other types of bonds, these products typically have a relatively short duration – generally between 1 and 3 years – allowing investors to recover their capital more quickly.

This feature is particularly appealing to investors seeking to optimise liquidity and reduce exposure to risk.

Furthermore, alternative fixed-income bonds offer investors the opportunity to diversify their portfolios by investing in a sector that is relatively uncorrelated with traditional markets.

In the world of litigation finance, returns are uncorrelated to traditional markets

Potential returns from fixed-income bonds in litigation finance are often uncorrelated to the performance of stocks and traditional bonds, making them an effective tool for mitigating overall portfolio risk.

However, investing in alternative fixed-income bonds in the litigation sector also presents challenges and considerations. Due to the nature of litigation, investors need to be aware of the legal risks and uncertainties associated with these investments – and seek out opportunities that provide robust security structures that protect your investment.

Fixed-income litigation bonds provide strong returns and portfolio diversification

In conclusion, alternative fixed-income bonds in the litigation sector represent a fascinating opportunity for investors seeking attractive returns and portfolio diversification.

However, it is essential for investors to fully understand the risks and considerations associated with these products before engaging in this rapidly evolving field.

With reasonable diligence and a clear understanding of the implications, alternative fixed-income bonds in the litigation space can be a valuable addition to a well-balanced portfolio.

Elena Schaffter
Elena Schaffter

Elena Schaffter

Director, Fixed Income Division

Our litigation financier partner, Greenpark Global, specialises in fixed-income bonds that offer some of the highest levels of investor protection as well as robust returns. Book a chat to find out more.

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