Fund Review: Zyfin Turkey Sovereign Bonds ETF

Fund Review: Zyfin Turkey Sovereign Bonds ETF

The world’s first Turkish sovereign laddered bond fund has been launched by ZyFin. The LAM Alternatif ZyFin Turkey Sovereign Bonds Ucits ETF is listed and available on the London Stock Exchange and the Deutsche Börse.

The objective of the fund is to track the ZyFin Turkey Sovereign Bond Laddered Index, which consists of a basket of sovereign bonds issued by the Turkish government in Turkish lira (TRY). Any underlying exposure is taken through physical replication.

The index comprises six bonds issued by the government that have more than 100m TRY (£23.6m). They are divided into three baskets with each containing two bonds and a residual maturity that is closest to a target maturity of two, five and 10 years, respectively.

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The group believes it is an ‘attractive’ investment solution for investors looking to participate in the growth momentum it thinks will unfold in Turkey.

ABank Turkey (a subsidiary of Commercial Bank of Qatar) will be providing the fund with local market expertise in the Turkish market with geopolitical and macroeconomic assessments. The fund’s total expense ratio is 0.89 per cent.

Zyfin’s executive chairman, Sanjay Sachdev, says the group’s aim is “to provide exposure to difficult-to-access growth markets in a cost-effective and transparent means.”

With all the current woes in the Middle East, Turkey may seem like a strange place to invest right now — especially as it has been dealing with its own unfortunate and tragic events such as bombings in Istanbul. But while straddling Europe and the Middle East, Turkey’s debt is investment grade, and its GDP growth is forecast to be 3.5 per cent this year.

Turkey is a country that should by no means be invested in for the short-term. Instead long-term views will allow the country’s potential growth story to play out. More contrarian investors may wish to invest in the country rather than those with a low-risk appetite.

While it may not be at the top of investor wish lists, this fund could be an interesting addition to a balanced portfolio, although it should not be for the faint-hearted.