Tabula Investment Management has expanded its fixed income range with the launch of Europe’s first euro high yield bond Paris-aligned climate ETF.
The Tabula EUR HY Bond Paris-Aligned Climate UCITS ETF (THEP) is listed on the Deutsche Boerse with a total expense ratio (TER) of 0.50%.
THEP tracks the iBoxx MSCI ESG EUR High Yield Pairs Aligned Capped index which offers exposure to euro high yield bonds with low greenhouse gas (GHG) emissions.
It excludes fossil fuel companies, controversial weapons, gambling, alcohol, civilian firearms and tobacco as well as issuers that violate global norms such as the UN Global Compact.
THEP meets the criteria of the European Union’s Paris-Aligned Benchmark (PAB) which requires a 50% carbon intensity reduction versus the parent index and an annual decarbonisation target of 7%.
Finally, the ETF overweights securities with strong or improving ESG ratings while underweighting those that score poorly.
THEP is classified as Article 9 under the Sustainable Finance Disclosure Regulation (SFDR).
Michael John Lytle (pictured), CEO of Tabula, commented: “There is now no doubt that investors want to align their portfolios with the Paris Climate Accord goals.
“We have seen a raft of new Paris-aligned equity ETFs but fixed income investors risk being left behind. Tabula is keen to address this by adding THEP to our existing range.”
Jason Smith, CIO at Tabula, added: “The PAB rules set out strong climate standards, but many investors want to go a step further in terms of broader ESG integration.
“This is particularly true in the high yield market, where the ESG risks may be greater and issuers are perhaps less able to mitigate them.”
Last January, the fixed income ETF specialist unveiled Europe's first investment grade bond Paris-aligned ETF, the Tabula EUR IG Bond Paris-aligned Climate UCITS ETF (TABC).