Tabula Investment Management has launched an ETF to invest in Paris-aligned euro-denominated ultra short investment grade corporate bonds.
The Tabula EUR Ultrashort IG Bond Paris-Aligned Climate UCITS ETF from the European ETF provider meets the criteria of an Article 9 fund under the Sustainable Finance Disclosures Regulation (SFDR).
It also provides “significantly lower” portfolio greenhouse gas (GHG) emissions and a better ESG profile than existing ultra short investments, according to the company. It said the ETF has a 50% initial reduction in GHG emissions compared to the broad benchmark, and a 7% year on year reduction.
The ETF also has an ESG screening for human rights, labour, environment and anti-corruption, as well as alcohol, adult entertainment, gambling, controversial weapons, civilian firearms, nuclear power, GMO, nuclear weapons and cannabis.
Liquidity and holdings constraints will be used to improve the ETF’s liquidity profile, while maintaining similar characteristics to the broad underlying benchmark.
The strategy aims to deliver key metrics similar to the broad EUR ultrashort IG bond index it is based on. The ETF index has a current 12-month gross yield of 4.3% with duration of around 0.4 years, an average daily volatility of less than 1bp and average credit rating of A.
For the ETF, Tabula worked with Solactive and ISS ESG to develop a Paris-aligned benchmark for euro-denominated ultrashort investment grade bonds.
The new Solactive ISS Paris Aligned Select 0-1 Year Euro Corporate IG Index (SOLES01P Index), which Tabula’s ETF tracks, has a strong correlation with its parent index, the Solactive 0-1 Year Euro Corporate IG Index (SOLEC01 Index).
The investment universe for the index consists of bonds with a maximum maturity of one year. Issuer allocations are capped at 5% of the index.
Michael John Lytle, Tabula CEO, said: “Tackling climate change is the defining issue of our age, and a major risk to all investment portfolios.
“Meeting the goals of the Paris Agreement requires a multi-pronged approach. Investors must combine targeted allocations to specialist climate solutions with a shift of large asset pools into broad climate-friendly investments.”