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

 The strategy gets a Low Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in volatility exposure and liquidity exposure compared with category peers. Low volatility exposure is attributed to stocks with a lower standard deviation of returns. And a low liquidity exposure is rooted in stocks with lower trading volumes, limiting managers' flexibility. 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

Equinix

Welltower

Prologis

Extra Space Storage

CubeSmart

AvalonBay Communities

Sabra Health Care

National Retail Properties

STAG Industrial

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. Janus Henderson US Real Estate ETF earns a Low Process Pillar rating. 

The primary detractor from the rating is the parent firm's five-year retention rate of 69%, which suggests it could do more to retain its portfolio managers. The parent firm's five-year risk-adjusted success ratio of 52% also detracts from the process. The measure indicates the percentage of a firm's funds that survived and beat 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 risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 3.1 stars, detracts from the rating as well. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis.

 This strategy prefers smaller market-cap companies compared with the average fund in its peer group, the Real Estate Morningstar Category.  But in terms of investment style, it is on par with peers. Analyzing additional factors, this strategy has continually underweighted stocks that have a lower standard deviation of returns compared with Morningstar Category peers over the past few years. These low-risk stocks are typically at their best when markets are not. Low volatility exposure contributes to limited loss on the downside at the cost of a lag in bull markets. In the latest month, the strategy was also less exposed to the Volatility factor compared with Morningstar Category peers. Given the low trading volume of holdings, this strategy also has higher liquidity risk exposure in these years, consistently over its peers. Less-liquid stocks might offer strong returns to compensate for their risks, but they can be harder and more expensive to trade in bear markets. Similarly, in recent months, the strategy also had less exposure to the Liquidity factor than peers. Additionally, this strategy has demonstrated a preference for high-momentum stocks in these years. Momentum is based on the premise that market outperformers will continue to outperform, and laggards will continue to lag. This means that managers are overweighting stocks currently on a winning streak. In this month, the strategy also had more exposure to the Momentum factor over its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in real estate by 2.6 percentage points in terms of assets compared with the category average, and its healthcare allocation is similar to the category. The sectors with low exposure compared to category peers are consumer cyclical and financial services; however, the allocations are similar to the category. The portfolio is composed of 24 holdings and is quite concentrated. More concretely, 62.8% of the strategy's assets are housed within the top 10 holdings, as opposed to the category’s 59.9% average. And finally, in terms of portfolio turnover, on a year-over-year basis, 73% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Process

Janus Henderson US Real Estate ETF earns an Average People Pillar rating. Greg Kuhl brings eight years of listed portfolio management experience to the team. The average Morningstar Rating of the strategies they currently manage is 4.2 stars, indicating that their risk-adjusted returns outperformed the category average. Greg Kuhl draws on only one other listed manager. Together, they are adequately equipped with eight years of average listed portfolio management experience. As a team, they manage two investment vehicles together, with a Neutral asset-weighted average Morningstar Medalist Rating, indicating the team will struggle to deliver positive alpha in aggregate. The highest personal investment by either manager is between $10,000 and $50,000. That is too low to promote alignment of their interests with the fund'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 U.S. Real Estate ETF

JRE is an actively managed fund of real-estate and real estate-related companies in the United States.

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OUTFRONT Media

REITs bounced back from a rough start to the year with a strong +3.26% average total return in March. Mid cap (+5.04%), small cap (+3.90%) and large cap REITs (+2.32%) averaged gains in March, while micro caps (-0.32%) saw yet another month in the red. 78.06% of REIT securities had a positive total return in March.

The State Of REITs: April 2024 Edition

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REITs fell slightly deeper into the red in 2024 with a -0.81% total return in February. Mid cap (+1.46%) and large cap REITs (+1.04%) averaged gains in February outperforming small caps (-1.33%) and micro caps (-6.98%). Only 50.64% of REIT securities had a positive total return in February.

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The REIT sector had a rough start to 2024 with a -5.72% total return in January. Large cap REITs (-4.79%) outperformed their smaller peers in January. Micro cap REITs (-8.39%) averaged the steepest declines. Only 9.55% of REIT securities had a positive total return in January.

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Power REIT

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Hello! This week's ETF wrap looks at real estate funds with exposure to commercial properties, an area of the market under pressure as investors worry lending is tightening after this month's stress in the banking sector.

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News for Janus Henderson U.S. Real Estate ETF ETF (JRE)