A new exchange-traded fund (ETF) is set to launch a range of unique fixed income funds targeting European institutional investors.
This will include insurance companies, pension funds, asset managers, private banks, and wealth managers.
Tabula Investment Management will be lead by Michael John Lytle as CEO, and Hasan Sabri as COO.
The sales team will cover the UK, Ireland, Germany, France, Switzerland, Austria, Belgium, Luxembourg, the Netherlands, and the Nordics.
Tabula will launch its first ETF soon, and is set to provide new and more precise tools for passive credit exposure.
Additionally, Tabula plans to expand its offering across the asset class, moving from investment grade and high yield credit into inflation, government debt, emerging markets, bank capital, money markets, ESG strategies and Solvency II-efficient funds.
Tabula believes the persistent innovation that ignited the equity ETF market has been lacking in the fixed income sector resulting in large incumbent funds continuing to gather assets, but investors are eager for new products.
In 2017, there were record inflows of $140 billion into fixed income ETFs.
According to new research by Tabula, 53 percent of investors believe 2018 will be a record year for inflows into fixed income ETFs, and by 2020 51 percent predict there will be $1.6 trillion or more in fixed income ETFs.
However, 38 percent of investors say the level of innovation in the fixed income ETF space is less than in the equity ETF market, with just 11 percent saying it’s higher, the research found.
Lytle said: “Passive strategies account for only 5 percent of fixed income fund assets, compared to 30 percent for equities. We expect this gap to close, but how quickly will depend on how compelling the available funds are.”
He added: “There are currently over 400 fixed income ETFs in Europe, but almost half of the assets are concentrated in the top 20. We are optimistic that delivering precise exposure and addressing specific investment needs will resonate with investors and complement existing products.”
