A new exchange-traded fund that gives investors an opportunity to short US bonds has started trading on the London Stock Exchange.
Tabula Investment Management Limited said the North American CDX High Yield Credit Short UCITS ETF (TABS) is the only ETF of its type listed in Europe.
TABS gives investors exposure to the CDX North American High Yield Credit Short Index, which was developed by Tabula and IHS Markit and tracks around100 sub-investment grade entities that reflect the most widely traded segment of the North American High Yield credit market.
The launch comes at a time when the rate of year-to-date defaults in US corporate credit is at its highest since 2009, said Tabula.
TABS aims directly to replicate the index composition via CDS index positions and cash collateral.
“This is a very opportune time to launch an ETF that enables investors to hedge against the North American high yield corporate credit market,” said Michael John Lytle, Tabula’s chief executive.
“Defaults have been rising, and downgrades have accelerated sharply this year. We are also seeing an increase in the number of ‘fallen angels’ – companies that have their debt rating reduced to high yield status due to their deteriorating financial position – and this too could lead to further uncertainty.”
Lida Eslami, Head of Business Development, ETP, London Stock Exchange added: “Today’s listing from Tabula will provide investors with an efficient tool to hedge against North America’s high yield credit market at a time when the impact of COVID-19 continues to pose challenges for businesses across all sectors.”
Tabula is a London-based asset manager focused on fixed income that offers differentiated UCITS ETFs and funds to institutional investors.