Tabula launches both ETF and non-ETF GBP hedged share classes of article 9 Paris Aligned Ultrashort Bond ETF

European ETF provider Tabula Investment Management Limited has launched two new sterling-hedged share classes of the Tabula EUR Ultrashort IG Bond Paris-aligned Climate UCITS ETF.

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Michael John Lytle CEO Tabula

The first is listed on the London Stock Exchange, with ticker TUGB LN. The second share class marks the firm’s first non-exchange traded share class in its ETF range, and provides institutional investors with a daily dealing UCITS share class of the fund.

The firm now runs €23 million across its EUR Ultrashort IG Bond funds. The sterling-hedge share classes offer a current gross yield of 5.6% in GBP, an average duration of just 0.37 years, an average credit rating of A- and an average daily volatility of less than 1bp.

The Tabula EUR Ultrashort IG Bond Paris-Aligned Climate UCITS ETF meets the criteria of an EU SFDR Article 9 fund, and provides significantly lower portfolio GHG emissions and an enhanced ESG profile when compared to existing ultrashort solutions.

The investment strategy for the new ETF is designed to help contribute to limiting global warming to 1.5°C in accordance with the Paris Agreement, while integrating environmental, social and governance (ESG) criteria into the security selection process.

Key features of the strategy include:

• 50% initial reduction in GHG emissions vs the broad benchmark and a 7% year-on-year annual reduction
• ESG screening: norms-based (e.g. UNGC), controversies and certain business activities (alcohol, adult entertainment, gambling, controversial weapons, civilian firearms, nuclear power, GMO, nuclear weapons, cannabis)
• Liquidity and holdings constraints applied to improve liquidity profile while maintaining similar characteristics to the broad underlying benchmark

An index for the economy of tomorrow

For this ETF, Tabula worked with Solactive and ISS ESG to develop a Paris-aligned benchmark for euro-denominated ultrashort investment grade bonds. The Solactive ISS Paris Aligned Select 0-1 Year Euro Corporate IG Index (SOLES01P Index), which Tabula’s ETF tracks, has a strong correlation with its parent index, the Solactive 0-1 Year Euro Corporate IG Index (SOLEC01 Index). However, the new index provides a 50% greenhouse gas emissions reduction compared to its parent, and it also delivers a 7% annual emissions reduction.

The investment universe for the index consists of bonds with a maximum maturity of 1 year. Issuer allocations are capped at 5% of the index.

A climate-friendly solution for large asset pools

“Tackling climate change is the defining issue of our age, and a major risk to all investment portfolios,” says Tabula CEO Michael John Lytle. “Meeting the goals of the Paris Agreement requires a multi-pronged approach. Investors must combine targeted allocations to specialist climate solutions with a shift of large asset pools into broad climate-friendly investments.

“The launch of these sterling-hedged share classes shows our commitment to UK investors looking for interesting yield with low volatility. The non-exchange traded share class brings many of the traditional benefits of ETF investing, but makes it available to those without the tools to trade ETFs.”

Source : ETFWorld.co.uk