New Listing

Tabula launches Europe’s first Gulf sovereign bond ETF

TGCC launches with $30m seed investment

Theo Andrew

Michael John Lytle

Tabula Investment Management has expanded its fixed income range with the launch of Europe’s first Gulf Cooperation Council (GCC) government bond ETF, ETF Stream can reveal.

The Tabula GCC Sovereign USD Bond UCITS ETF (TGCC), which launched with a $30m seed investment, is listed on the London Stock Exchange with a total expense ratio (TER) of 0.45%.

TGCC tracks the ICE Gulf Cooperation Council Government Bond ex-144a index which offers exposure to the six GCC countries, Saudi Arabia, the UAE, Qatar, Bahrain, Oman and Kuwait, with a 25% country cap.

The index is composed of roughly 100 AA to B-rated government bonds with at least one-year maturity and a minimum outstanding of $500m.

According to Tabula, the index has a current yield of 5.2% and a duration of 7.8 years.

The ETF issuer said TGCC allows investors to make more granular asset allocation decisions to countries seeking “rapid economic development” with “ambitious plans to liberalise and diversify their economies”.

Until now, investors have only been able to gain access to the Middle East bond market via broad emerging markets or global ETFs.

The Middle East has outperformed broad emerging markets since 2018 and has been the top-performing emerging market region for the past two years on the back of elevated oil and gas prices, according to ICE.

However, Tabula added GCC countries are currently undergoing numerous projects aimed at diversifying their income at the same time as shifting towards more “climate-friendly industries”.

Michael John Lytle (pictured), CEO of Tabula, said: “With recession fears and continued economic uncertainty remaining a predominant global concern, investors may now find it an auspicious time to reassess asset allocation decisions.

“As the GCC region undertakes numerous initiatives to diversify revenue streams away from oil and gas, a more granular allocation to the region could play a significant role in building more defensive portfolios.”

Jason Smith, CIO at Tabula, added the GCC countries’ creditworthiness has improved in recent years following economic and fiscal reforms.

“In addition, they have large reserves of foreign currency which helps maintain stable economic growth and makes their bonds relatively lower risk compared to other emerging markets,” he said.

TGCC is the firm’s latest launch since it unveiled the Tabula EUR HY Bond Paris-Aligned Climate UCITS ETF (THEP) in February last year.

THEP’s assets under management stand at €62.7m, as at 10 January.

The past 12 months have seen Tabula close several ETFs including its first-ever product, the Tabula European IG Performance Credit UCITS ETF (TCEP), which ceased trading last March.

The firm closed two more last June as it turned ‘laser-focused’ on ESG.

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