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Tabula launches sterling-hedged share class of its GCC bond ETF


European ETF provider Tabula Investment Management has listed a sterling-hedged share class of the Tabula GCC Sovereign USD Bonds UCITS ETF (TGGD LN) on the London Stock Exchange. The new listing enables UK investors to access GCC government bonds, while aiming to minimise currency risk, the firm writes.

The share class joins the USD base currency class of the ETF, which launched at the beginning of January with USD30 million in assets. TGGD LN offers a current gross yield of ~4 per cent in GBP and a duration of 7.9 years.

Liquid exposure to some of the fastest-growing emerging markets

The ETF aims to track the ICE Gulf Cooperation Council Government Bond ex-144a Index (the Index; ticker: EGCC Index). Developed by Tabula, the Index is composed of approximately 100 AA- to B-rated government bonds denominated in USD. To be included, bonds require a minimum 1yr maturity and a minimum amount outstanding of USD500 million. The Index currently provides exposure to six GCC countries and applies a 25 per cent country cap.

“TGGD has been launched in response to demand from UK investors for more granular asset allocation options, and provides an ETF exposure that until this year did not exist. We believe the fund will be of great value to UK investors looking for attractive yields and exposure to the exciting growth potential of the GCC,” says Tabula Chief Commercial Officer, Stefan Garcia.

“As a basket, 10-year GCC government bonds are currently offering yields almost 2 per cent higher than US Treasuries. The GCC countries have low debt-to-GDP ratios and increasingly dynamic economies that could be considered healthy compensation for investors trying to inject more yield into their portfolio” adds Tabula CIO, Jason Smith.

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