Tabula Launches Cash Bond ETF On European CDS Benchmark01.09.2020
- The Tabula iTraxx Europe IG Bond UCITS ETF offers innovative exposure to one of the most widely traded European credit indices, iTraxx Europe
- Unlike traditional European cash bond indices, the index only contains EUR-denominated names from European issuers
- Equal weighting avoids large sector biases, focusing mainly on corporates
- 5y maturity target allows for more efficient hedging
European fixed income ETF provider Tabula Investment Management Limited (“Tabula”) has launched the Tabula iTraxx Europe IG Bond UCITS ETF, offering passive exposure to the new iBoxx iTraxx Europe Bond Index, which Tabula has developed in partnership with IHS Markit. The innovative index combines the robust construction of an iBoxx bond index with the geographic and sector exposure of iTraxx Europe, the reference instrument for trading European investment grade corporate names via credit default swaps.
In contrast to the majority of European bond indices, which target EUR-denominated bonds from all issuers, the iBoxx iTraxx Europe Bond Index only contains bonds from European issuers. Additionally, the index consists of fixed sector bands with equal weighting per issuer, to achieve a more diversified index. In contrast, some European investment grade bond ETFs have around 40% exposure to financials. The index also features a narrower maturity band than the majority of its competitors, targeting an average 5y maturity, to facilitate more efficient hedging if required.
“We are very excited at the level of innovation offered by both the ETF and its benchmark index”, comments Tabula CEO Michael John Lytle. “The iBoxx iTraxx Europe Bond Index utilises index provider IHS Markit’s market leading position in both cash bonds and CDS. Working together we are able to offer differentiated and truly European corporate bond exposure.”
“We’re excited to combine our expertise with CDS and bond markets in the iBoxx iTraxx Europe Bond Index,” says Frans Scheepers, Managing Director for Indices at IHS Markit. “The new ETF from Tabula expands the range of products linked to our indices and provides investors a new instrument to gain exposure to the corporate credit market.”
Tabula is continuing to grow its pipeline of innovative passive fixed income solutions and will soon be expanding its range to include an inflation-linked product.
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