Fixed income ETF issuer Tabula Investment Management has expanded its range with the launch of a global investment grade steepener bond ETF.
The Tabula iTraxx-CDX IG Global Credit Steepener UCITS ETF (TCRS) is listed on Deutsche Boerse with a total expense ratio (TER) of 0.40%.
Tracking the iTraxx-CDX IG Global Credit Steepener index, TCRS outperforms when the steepness of investment grade credit curve increases.
It offers exposure to North American and European investment grade credit curves by investing 50% in iTraxx Europe index and 50% in the CDX North American Investment Grade index, which both consist of 125 equally-weighted investment grade securities.
In order to capture the steepness in these two credit curves, the index sells 5-year protection and buys 10-year protection. It takes approximately 3x exposure to the 10-year bonds and sets the 5-year exposure so as to minimise sensitivity to directional moves in credit spreads.
TRCS is the first ETF in Europe to offer exposure to this market.
Michael John Lytle (pictured), CEO of Tabula IM, commented: “Steepener strategies are a well-known way to generate returns from interest rate curves
“This opportunity exists in credit markets too but has been more difficult to access, requiring specialist credit default swap infrastructure and execution capabilities.
“This ETF can be used to take a view on credit curves or as a diversified source of returns over the long term.
“We have worked with IHS Markit to create a liquid and transparent index that can be accessed via a UCITS ETF.”
This is the third ETF Tabula IM has launched this year. In July, the firm brought the Tabula North American CDX High Yield Credit Short UCITS ETF (TABS) to market.