The Tabula monthly | Where to invest when US markets are impossible to read?

The Tabula monthly - October 2020

Where to invest when US markets are impossible to read?

With nobody knowing what is going to happen next in Washington DC, US markets are impossible to read. Certainty is the market's friend, and the situation is likely to get worse until an outcome to the election is known.

Last month, we launched the Tabula iTraxx-CDS IG Global Credit Steepener UCITS ETF (TCRS). TCRS is a unique credit carry strategy that collects carry from the typically positive spread differential between 5y and 10y maturities. It also profits from steepening of European and US IG credit curves, and generates income by rolling down the curve semi-annually into the on-the-run European and US IG CDS indices.

The ETF's index has historically exhibited lower volatility, a higher Sharpe ratio, and minimal interest-rate sensitivity compared to standard IG bond indices.

Capturing the iTraxx Europe and CDX NA IG 5y and 10y credit spread differential

Tabula/Markit as of 30 September 2020. Differential calculated as difference between 10y and 5y IG credit spread. 5y average spread difference calculated between 30 September 2015 until 30 September 2020

TCRS is awaiting confirmation of country registration from host regulator in the following countries: AT, CH, DK, FR, IT, LU, NO, UK.

For Euro IG investors looking to moderate their exposure to the US, the Tabula iTraxx IG Bond UCITS ETF (TTRX) offers exposure to European issuers only, avoiding EUR-denominated bonds from US corporates.

TTRX exposure-1 Tabula/Markit as of 30 September 2020.

In addition, TTRX's enhanced liquidity profile has led it to historically show a lower price-to-NAV discount relative to peers during volatile market conditions.

Tabula expands team with key coverage hires

We are delighted to welcome David Schnautz, German-speaking coverage and Abdallah Muhammad, Nordics coverage, to our growing team.

David joins from BlackRock iShares where he was a fixed income ETF product strategist, while Abdallah was previously Head of Nordic ETF Business Development at Invesco, having joined as part of Invesco's acquisition of Source in 2017.

Save the date 📅 | Tabula Talks: Inflation on the rise

Join us on Wednesday 21 October at 14.00 (GMT+1) for a fixed income webinar on inflation with David Bowers, Head of Research at independent research firm Absolute Strategy Research. During this 20 minute session David will give a macro view on inflation, the new Fed inflation regime and will discuss how the post pandemic environment is likely to affect inflation rates.

For more information click here to email us.

How did our ETFs perform in September?

Tabula iTraxx IG Bond (EUR) Dist¹	+0.1%	See the factsheet >
Tabula European Performance Credit (EUR) Acc	-2.4%	See the factsheet >
Tabula European iTraxx Crossover Credit (EUR) Acc	-2.5%	See the factsheet >
Tabula European iTraxx Crossover Credit Short (EUR) Acc	+2.8%	See the factsheet >
Tabula North American CDX High Yield Credit Short (USD) Acc²	+1.4%	See the factsheet >
Tabula Global IG Credit Curve Steepener UCITS ETF (EUR) Acc³	-0.4%	See the factsheet >
Tabula J.P. Morgan Global Credit Volatility Premium (EUR) Acc	+0.3%	See the factsheet >

¹Performance represents the iBoxx iTraxx Europe Bond Index. ² Performance represents the CDX North American High Yield Credit Short Index. ³ Performance represents the iTraxx-CDX IG Global Credit Steepener Index.


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