Tabula ETF

Tabula: Investors set to increase exposure to fixed income ETFs

Tabula : Research points to greater allocation to fixed income and ETFs within the asset class over the next three years…

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New research from European fixed income ETF provider Tabula Investment Management, reveals 32% of professional investors – from wealth managers to pension funds – plan to increase their exposure to fixed income over the next three years.

Within their fixed income portfolios, the allocation to ETFs is also set to rise; the number of investors with 10% or more of their fixed income exposure in ETFs more than doubles from 16% to 33% in the same period.

This brings the average amount invested up to 12% by 2022, compared to 7% today.  

Additionally, more than half (51%) of investors are hopeful that the level of smart beta and innovation used in the fixed income ETF sector will increase over the next three years.

This is despite 72% of wealth managers and institutional investors saying that the environment for trading fixed income has not seen notable progress in the last three years, with 47% saying it has actually become harder. In particular, finding Euro-denominated fixed income investments that deliver satisfactory levels of yield is a challenge for 63% of investors.

Percentage of their current fixed income portfolio in ETFs (professional investors) Today Expected allocation in 2022
None 32% 19%
Under 10% 40% 34%
Between 10% and 20% 9% 19%
Between 20% and 50% 7% 13%
Over 50% 1%
Don’t know 12% 13%

“As investor appetite for fixed income grows, so does the demand for innovation in fixed income ETFs as a means of broadening accessing to the asset class at a low cost,” says Tabula CEO Michael John Lytle.

“At Tabula, we want to help drive this process. At a time when negative Euro yields are driving many investors to increase their high yield allocations in their search for yield, we offer solutions that allow investors to access yield scaled up a mainly investment grade portfolio, in order to generate returns comparable to high yield. Meanwhile, our ETFs have minimal interest rate exposure, helping to address concerns about rising rates.”

Tabula’s current offering includes investment grade performance funds, tools for both long and short high yield, as well as the first credit volatility premia ETF (TVOL).

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