Japan's bond investors are so desperate for yield that more and more of them are putting money in notes from insurers whose value can be wiped out by unexpectedly strong hurricanes or earthquakes.

Catastrophe bonds in the U.S. yield 3.3 percent on average, a Swiss RE AG index shows, beating the 1.5 percent yield on 10-year Treasuries and the minus 0.095 percent for Japanese sovereigns of similar maturity.

Asuka Asset Management Co.'s $52 million Asuka Insurance Linked Opportunities Strategy fund mainly invests in such notes. It said interest from Japanese pension funds, already accounting for more than 90 percent of holdings in the fund, and endowments are about twice as strong as a year ago.