European fixed income ETF provider Tabula Investment Management has listed its Asia ex-Japan High Yield Corporate USD Bond ESG UCITS ETF on Xetra (Ticker: TAEH GY).
European fixed income ETF provider Tabula Investment Management has listed its Asia ex-Japan High Yield Corporate USD Bond ESG UCITS ETF on Xetra (Ticker: TAEH GY).
The firm writes that the new listing offers investors EUR-Hedged exposure to the offshore Asian high yield market. The ETF was launched on the London Stock Exchange (TAHY LN) in early September, and has already attracted USD100 million of assets from a range of institutional investors.
The ETF was developed in partnership with Haitong International Asset Management (“Haitong International”), an investment manager with considerable expertise in the Asian high yield market as well as strong ESG credentials.
The Tabula Haitong Asia ex-Japan High Yield Corp USD Bond ESG UCITS ETF aims to enhance both liquidity and ESG profile, while maintaining an attractive yield (currently ~11.5 per cent ), a duration of ~2.8 years, and is classified as Article 8 under EU Sustainable Finance Disclosure Regulation (SFDR).
“While the opportunity in Asian high yield is clear, there are also some challenges to address,” says Tabula CEO Michael John Lytle. “With high yield issuers, there can be greater concerns about ESG, particularly governance, and liquidity is also a consideration. Local expertise can significantly improve trading efficiency.”
“Working in partnership with Haitong International, leveraging their considerable experience and on-the-ground presence in the region, as well as IHS Markit, we have been able to address these opportunities.”
“The reception from institutional investors in the first two months of trading shows there is significant demand for this asset class from investors. By offering a EUR-Hedged listing on Xetra, European ETF investors can now access the Asian USD high yield corporate bond market efficiently and make far more granular asset allocation decisions.”
Frederick Chu, Head of ETF Business at Haitong International, says: “Asian credit is now a trillion-dollar asset class – and China the world’s second largest bond market – but many European investors are significantly underweight. The new listing on Xetra shows our collective commitment to European investors. The ETF provides straightforward access to the USD segment of Asia’s high yield market, while also addressing ESG and liquidity challenges.”
“As well as yield, this market can provide interesting diversification benefits in a fixed income portfolio, since it is often at a different stage in the market cycle. It is also worth noting that default rates for USD Asian high yield bonds have been significantly lower than for US high yield bonds.”
