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A significant proportion of professional investors in Europe believe that the current ESG offering amongst fixed income ETFs needs improving, according to research from Tabula Investment Management.
Tabula, a specialist provider of innovative fixed income ETFs in Europe, recently conducted a survey of 100 investors based in the UK, France, Germany, Italy, and Switzerland who collectively manage over $140 billion in assets. Respondents included fund managers, wealth managers, private banks, and family offices.
The research found that one in ten European professional investors rate the current line-up of ESG-tailored fixed income ETFs as poor, while a further 29% described it as average. Just 7% believed the offering was excellent with the remainder claiming it to be quite good.
In terms of improvements, 60% of those surveyed would like to see more innovative products available, followed by 54% who would like to see better coverage across different fixed income segments, and 44% who want greater transparency.
Corporate credit was the segment that investors believe is most in need of improvement, cited by 62% of respondents, while investors would also like to see enhancements in high yield credit and emerging markets, each noted by 39% of those surveyed.
Commenting on the findings, Michael John Lytle, CEO of Tabula Investment Management, said, “Our research shows there is much room for improvement in the range of ESG fixed income ETFs. At Tabula, we are working hard to offer unique fixed income ETF solutions with a strong focus on ESG, innovation, and diverse exposures.
“Almost 70% of our current ETF AUM is in ESG (EU SFDR Article 8) or climate (EU SFDR Article 9) ETFs, which helps explain why our group assets under management have increased in the last twelve months from $440 million to $725m while the European fixed income ETF market as a whole shrank by 7%.
“We are in the process of launching several new funds and exploring how to address investors’ needs and tackle the current gaps in fixed income solutions. Every time we propose a new fund to clients, they share with us five other challenges facing their fixed income portfolios. It is a very dynamic environment, ripe with needs and opportunities.”