The combination of an Average People Pillar rating and a Low Process Pillar rating limit  Janus Henderson AAA CLO ETF to a Morningstar Medalist Rating of Negative.  The portfolio maintains a cost advantage over competitors, priced within the second-cheapest fee quintile among peers.  

 The strategy receives a Low Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in corporate bonds and A rated bonds compared with category peers. The strategy’s management team earns an Average People Pillar rating. The strategy's parent organization earns the firm an Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Morningstar's evaluation of this fund's process seeks to understand management's investment philosophy, and whether it has been applied consistently over time and can add value across the market cycle. Janus Henderson AAA CLO ETF earns a Low Process Pillar rating.    The main driver of the rating is the parent firm's five-year risk-adjusted success ratio of 52%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup. The parent firm's five-year retention rate of 69% also limits the process. The parent firm's risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 3.1 stars, detracts from the process as well. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis.

 Compared with other funds in the Ultrashort Bond Morningstar Category, this fund takes on significantly lower credit risk. But in terms of long-term interest-rate sensitivity, it hews closely to its average peer over the past few years. Opening the analysis to additional factors, the portfolio has displayed biases over time, whether towards or away from certain fixed-income instruments. Relative to the category average, the managers have been significantly underweight corporate bonds in recent years. In the latest month, the strategy has also relatively underweighted corporate bonds compared with Morningstar Category peers. Additionally, there's been a notable bias away from A rated bonds over the past few years. Similarly, in recent months, the strategy also had less exposure to A rated bonds than peers. Finally, during the past few years, the fund leaned meaningfully towards debt with 10- to 15-year maturities. In this month, the strategy also leaned more towards debt with 10- to 15-year maturities compared with its peers.

 This strategy's 12-month yield is 6.2%, higher than its average peer's 4.7%. Plus, its 30-day SEC yield (a measure similar to yield-to-maturity) sits at 6.8%. Higher yields tend to indicate higher credit risk. But that isn't always the case. Over the past 12 months, the average yield of the fund has been higher than the average yield of its Morningstar Category peers. The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated A.

Process

Janus Henderson AAA CLO ETF earns an Average People Pillar rating. John P. Kerschner, the longest-tenured manager on the strategy, boasts over 25 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 3.1 stars, reflecting average risk-adjusted performance versus category peers. John P. Kerschner has an experienced backdrop of support. The three listed managers boast 12 years of average listed portfolio management experience. As a team, they manage two investment vehicles together, with disappointing prospects. Across the strategies they manage, there is an asset-weighted average Morningstar Medalist Rating of Negative. This indicates the team is projected to generate negative alpha in aggregate. The highest personal investment in the fund by any of its managers is between $500,000 and $1 million. That's on the low side--it would need to be more than $1 million for us to see the investment as sufficient to promote the strong alignment of their interests with the strategy's investors. 

 Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

Average

People

Under new leadership, Janus Henderson Investors is in the early paces of a fortified vision. It maintains an Average Parent rating.

Ali Dibadj took the CEO reins in June 2022 when the public company's board made a leadership change after the firm, formed by the 2017 merger of Janus Capital and Henderson Group, stagnated. Dibadj, who has a background in investment management (most recently as AllianceBernstein's strategy head and CFO), has energetically engaged the organization to develop his strategic road map: protect and grow the core business; amplify existing capabilities; and diversify into new areas, which could include acquisitions. While these ideas aren't unique in today's asset-management industry or brand new to Janus Henderson—its former CEO espoused similar ones—Dibadj added his stamp by refreshing the firm's executive committee and investment team leadership. This has also included the basic but necessary addition of scorecards to measure progress on strategic initiatives that include new vehicles like exchange-traded funds and separate accounts, among other things.

Time will tell if Dibadj and team can deliver. The firm's equity analysts continue to turn over, but portfolio managers have executed their strategies consistently, and some key figures returned. In 2023's first quarter, the firm saw net inflows for the first time since the merger—a sign of a nascent turnaround.

Parent

Janus Henderson AAA CLO ETF

JAAA seeks to provide current income by actively selecting investment-grade floating rate collateralized loan obligations (CLO) securities of various maturities from issuers around the globe.

Panagram Bbb-B Clo Etf

Janus Detroit Street Trust-Janus Henderson B-BBB CLO ETF

CLO ETFs offer investors strong yields with little credit or interest rate risk. These are variable rate ETFs, and should see declining dividends as the Fed cuts rates. I still think they are buys, for three key reasons.

3 Reasons CLO ETFs Are A Buy, Even If The Fed Cuts

iShares Core U.S. Aggregate Bond ETF

Invesco Senior Loan ETF

Vanguard Total Bond Market ETF

Panagram AAA CLO ETF

Pimco Senior Loan Active Exchange-Traded Fund

Fixed income ETFs gathered $51 billion of new money in the first quarter. This represented 26% of the industry's net inflows.

Looking to Loan ETFs

Alpha Architect 1-3 Month Box ETF

Vanguard Short-Term Inflation-Protected Securities ETF

With prices, valuations, and inflation elevated, some investors are looking for comparatively safe, high-quality investments. T-bills, short-term TIPs, and AAA-rated CLOs are three of the best investments in this area. There are fantastic ETFs covering each of these securities.

3 ETFs For Short-Term Risk-Averse Investors

JAAA focuses on AAA-rated CLO tranches. It offers investors a good 6.2% yield and has outperformed bond peers since inception at very low risk. Yields should drop as the Fed cuts rates, but these seem likely to remain competitive.

JAAA Remains A Strong Income Fund, Even As Rate Cuts Loom

Sustained core inflation suggests an interest rate pivot isn't a given. However, we think the probability of a mid-to-late 2024 pivot remains high.

JAAA Vs. JBBB: Opting For Positive Duration And High Quality

Vanguard Short-Term Bond ETF

BlackRock Ultra Short-Term Bond ETF

PIMCO Enhanced Short Maturity Active ETF

Vanguard High Dividend Yield ETF

Health Care Select Sector SPDR Fund

Consider bond ETFs from Vanguard, dividends, and growth stocks as cash moves off the sidelines.

King Cash Is Being Dethroned. What to Buy Now.

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SPDR Portfolio High Yield Bond ETF

On Seeking Alpha, I focus on dividend ETFs targeted towards income investors and retirees. Dividend ETFs focusing on bonds and fixed-income securities have seen significant dividend growth these past two years. Some offer incredibly compelling yields. Of these, five funds stand out. A quick look at these follows.

Juan's Top Dividend ETFs For 2024

SPDR Bloomberg 1-3 Month T-Bill ETF

JAAA is one of my top-income ETFs for more conservative, short-term investors. The fund is broadly similar to t-bills and BIL, with a higher yield, but a bit more volatility. A comparison of these two funds follows.

JAAA Vs. BIL: Which Is Best For Income Investors And Retirees?

Vaneck CLO ETF

iShares iBoxx High Yield Corporate Bond ETF

Vanguard Intermediate-Term Corporate Bond ETF

Fixed income ETF demand has been strong in 2023 led by Treasury ETFs. However, advisors have been rewarded by turning to alternatives in the fixed income space, such as those focused on the collateralized loan obligations (CLOs) market.

How CLOs Can Provide an Alternative to Traditional Bond ETFs

PIMCO Enhanced Short Maturity Active Exchange-Traded Fund ETF, a short-term bond ETF, has achieved positive returns and outperformed other fixed-income asset classes since early 2023. Other funds, including Janus Henderson AAA CLO ETF, have performed even better. An overview of the MINT ETF, and at some alternatives, follows.

MINT Is Good, But JAAA Is Better

Janus Henderson Mortgage-Backed Securities ETF

Janus Henderson Short Duration Income ETF

Janus Henderson Securitized Income ETF

Janus Henderson Investors has launched an active ETFs that covers almost the entire U.S. investable securitized market. The Janus Henderson Securitized Income ETF (NYSE Arca: JSI) seeks high income by investing across the U.S. securitized market.

Janus Henderson Launches Active Securitized Income ETF

The Janus Henderson CLO ETFs offer investors opportunities to invest in higher spread, lower risk loans. Rising default rates are affecting credit differently across the board, and CLOs show strength that other fixed income products have not. The comparison to investment grade corporate bonds shows CLOs as clear winners, with quality credit shining above lower quality.

JAAA & JBBB: Why I'm Still Favoring Quality Credit

Janus Henderson AAA CLO ETF provides investors with floating-rate exposure to high-quality AAA-rated CLOs. JAAA was the first ETF to offer direct exposure to the $700 billion+ AAA CLO market, previously only available to institutional investors. JAAA has a reasonable management fee of 0.22% and has historically outperformed other floating-rate investment products.

JAAA: A Great ETF Helping To Level The Playing Field

Apollo Senior Floating Rate Fund

Franklin Senior Loan ETF

iShares Floating Rate Bond ETF

WisdomTree Bloomberg Floating Rate Treasury Fund

XAI Octagon Floating Rate & Alternative Income Term Trust

Floating rate securities have strong yields, low duration, and have significantly outperformed YTD. There are several strong floating rate funds available to investors. Credit risk varies, but there are options with minimal risk and high yields in the floating rate space.

The Best Floating Rate Funds For Income Investors And Retirees

Avantis International Small Cap Value ETF

Avantis Emerging Markets Equity ETF

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Capital Group Dividend Value ETF

Capital Group Growth ETF

Dimensional US Core Equity 2 ETF

Dimensional International Core Equity Market ETF

Dimensional Core Fixed Income ETF

Dimensional Emerging Markets Core Equity 2 ETF

Dimensional Emerging Markets Value ETF

Dimensional International Core Equity 2 ETF

Dimensional International Value ETF

Dimensional US Equity ETF

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And, plenty of ink has been spilled about how much money has gone into active ETFs in 2023, and from a pure top-line flows perspective, it's true. A significant chunk of the $289 billion that has entered U.S.-listed ETFs year to date went into active products — 22%, in fact.

2023's Overactive Active ETF Flows Are Mostly a Mirage

 SPDR Blackstone Senior Loan ETF

Federal Reserve hikes have led to strong dividend growth in most variable rate securities and funds. Two of these are senior loans and CLO debt tranches. A look at the similarities, and differences, between these two asset classes follows.

Senior Loans Or CLO Debt, Which Is Best For Income Investors And Retirees?

Collateralized loan obligations, or CLOs, offer investors good growing dividends and low interest rate risk. Their performance since inception has been outstanding, if somewhat short. A quick look at 3 CLO ETFs follows.

The Best 3 CLO ETFs For Income Investors And Retirees

Janus Henderson AAA CLO ETF is a fixed income exchange traded fund that has performed well in 2023. AAA CLOs yield more than Treasuries due to their complexity and SPV structuring, as well as their issuance under Rule 144A. JAAA has a granular build with a short duration, allowing it to pass higher yields to investors in a rising rates environment.

JAAA: 'Higher For Longer' Rates Favor This CLO Fund

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Oxford Lane Capital

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We review CEF market valuation and performance through the second week of August and highlight recent market action. CEFs rallied slightly on the week but remain in the hold in August. CEF distribution changes may affect the historical relative value relationships of similar funds.

CEF Weekly Review: Distribution Changes And Discount Relationships

JAAA and JBBB are both actively-managed ETFs investing in senior loan CLO tranches. JAAA focuses on AAA tranches, JBBB on BBB. A comparison of these two funds follows.

JAAA Vs. JBBB: Which CLO ETF Is Best For Income Investors And Retirees?

AAA CLO securities have minimal credit and duration risk and boast yields north of 7%, offering excellent risk/reward in our view. We highlight a number of second-order risks and how these securities compare to investment-grade bonds. We also highlight a couple of funds that allocate to AAA CLO tranches.

JAAA: AAA CLOs - Best Risk/Reward In The Income Space

Avantis Core Municipal Fixed Income ETF

JPMorgan Ultra-Short Income ETF

iShares Broad USD High Yield Corporate Bond ETF

Vanguard Short-Term Corporate Bond ETF

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Fixed income ETFs continue to gain in popularity, but not all investors are taking the same approach. For all of them, though, it is important to think about what advantages ETFs offer to client portfolios.

Fixed Income ETFs Have Many Uses

Janus Henderson AAA CLO ETF provides retail investors access to the previously inaccessible AAA CLO asset class. JAAA has experienced a significant increase in assets under management, reaching nearly $3 billion in under two years, due to its floating rate nature and spread pick-up. The fund is an attractive yielding vehicle with minimal credit risk, making it a suitable option for investors seeking floating rate exposure and diversification benefits.

JAAA: Becoming A Powerhouse On The Back Of Higher Rates

The JAAA ETF gives investors access to AAA CLO tranches. The fund currently yields 6.1%.

JAAA: 6.1% Yield From Synthetic 'AAA' Assets

JAAA is an AAA CLO ETF. Credit and interest rate risk are low. Dividends are good and growing. Strong risk-return profile.

News for Janus Henderson AAA CLO ETF ETF (JAAA)