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Fund Solutions

Tabula IM ETF Targets Fallen Angels in Bond Market

European provider of exchange-traded funds (ETFs), Tabula Investment Management, has developed the Paris-aligned Global High Yield Fallen Angels Climate UCITS ETF. Categorised as Article 9 under the EU’s Sustainable Finance Disclosure Regulation (SFDR), the fund aims to maximise potential financial returns from bonds that have been downgraded from investment grade, while simultaneously aligning with the goals of the Paris Agreement and reducing portfolio emissions across Scopes 1-3 by at least 50% compared to the broader market. The ETF will be overweight in newly fallen angels to increase exposure to any rebound and will retain exposure over the longer term to benefit from any upgrades. Tabula CIO Jason Smith said: “Fallen angels tend to be large, well-established names. Their business models and financing strategies are built around investment grade borrowing rates, so their management has a strong incentive to address the issues that triggered the downgrade. Obviously, there is good potential for price appreciation if they rebound.”   

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