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Some 97% of European institutional investors and wealth managers believe that the economic and fiscal reforms implemented by Gulf Cooperation Council (GCC) countries have improved the region’s credibility.
According to research by European ETF provider Tabula Investment Management Limited, 47% of those surveyed “strongly agree” with this view.
Meanwhile, a third (36%) of respondents strongly believe that the region’s large foreign exchange reserves will help it maintain stable economic growth and reduce bond risk compared with other emerging markets. Another 61 percent said they generally agreed with this sentiment.
GCC Bond ETF
Earlier this year, Tabula launched the first Gulf Cooperation Council (GCC) government bond ETF. The Tabula GCC Sovereign USD Bonds UCITS ETF (TGCC LN) offers a broad portfolio of US dollar-denominated government bonds issued by the six Gulf Cooperation Council countries (Saudi Arabia, UAE, Qatar, Oman, Bahrain and Kuwait).
Given the current market volatility and ongoing uncertainty in the global economy, 46% of institutional investors and wealth managers surveyed firmly believe that now is an opportune time for investors to reassess asset allocation decisions to increase diversification across geographies and instrument types.
Finally, 96% of professional investors surveyed firmly believe that with the region’s initiatives to diversify revenue streams away from oil and gas, a more granular allocation to the region could play a role in building more defensive investments play an important role in composition.
portfolio diversification
“Current market volatility has increased the need for investors to manage portfolio diversification,” said Tabula Chief Executive Michael John Lytle. “In emerging markets, most investors use very broad fixed-income benchmarks and are unable to overweight specific regions. We found that many investors believe that the GCC countries will successfully use their current profits to develop industries other than oil and gas. New business. They are doing that with equities but lack the tools to do the same in fixed income. That’s why we developed the TGCC ETF.”
TGCC is designed to track the ICE GCC Government Bonds ex-144a Index (the Index; symbol: EGCC INDEX). Developed by Tabula in partnership with ICE, the index consists of approximately 100 U.S. dollar-denominated government bonds rated AA to B.
To be included, bonds need to have a maturity of at least 1 year and an outstanding amount of at least $500 million. The index currently provides exposure to six GCC countries and applies a 25% country cap. The index’s current yield is 5.0% and its duration is 7.8 years.
The Tabula GCC Sovereign USD Bonds UCITS ETF (TGCC LN) is listed on the London Stock Exchange with approximately $40 million in liquid assets. — trade arab news agency
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