An incline in People Pillar rating is the primary driver of Janus Henderson International Sus Eq ETF's upgrade to a Morningstar Medalist Rating of Neutral from Negative. The portfolio maintains a cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy earns a Below Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in momentum exposure and an overweight in quality exposure compared with category peers. Momentum is the premise that stocks that have recently outperformed will continue to do so. With low momentum exposure, the portfolio is holding stocks that managers believe to be undervalued. And a high quality exposure is rooted in holding stocks with low financial leverage and strong returns on equity. This management team has a wealth of experience, but still gets an Average People Pillar rating. The strategy's parent organization earns the firm an Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

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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 International Sus Eq ETF earns a Below Average Process Pillar rating. 

The process is bolstered by its relatively concentrated portfolio, with its top 10 holdings accounting for 48% of assets. High-conviction picks court the risk of blowing up, but can also drive outperformance. However, the rating is limited by the parent firm's five-year retention rate of 70%, which suggests it could do more to retain its portfolio managers. The parent firm's five-year risk-adjusted success ratio of 54% also holds the process back. 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.

 This strategy targets smaller plays than its peers’ average in the Foreign Large Growth Morningstar Category. But in terms of style (value/growth) exposure, it is similar. Examining additional factor exposure, this strategy has had relatively low exposure to momentum stocks compared with Morningstar Category peers continually in the last few years. Momentum investors tend to expect stocks that have done well recently to continue to do so in the short term. Momentum approaches can entail higher turnover and trading costs since the top stocks can often change. In the latest month, the strategy was also less exposed to the Momentum factor compared with Morningstar Category peers. This strategy also has had a defensive tilt, with exposure to higher-quality stocks compared with peers in recent years. This means that the fund holds companies that are profitable, growing, and have solid balance sheets. Such holdings could cause it to trail peers during economic booms, but help it better withstand busts. Compared with category peers, the strategy also had more exposure to the Quality factor in the most recent month. Furthermore, the strategy had less exposure to high-volatility stocks compared with Morningstar Category peers in recent months. These companies have historically been a valuable ballast to steady portfolio returns during market downturns.  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 technology and utilities relative to the category average by 16.0 and 10.6 percentage points, respectively. The sectors with low exposure compared to category peers are healthcare and consumer defensive, underweight the average by 9.3 and 6.8 percentage points of assets, respectively. The portfolio is composed of 40 holdings and is quite concentrated. In particular, 48.3% of the fund’s assets are housed within the top 10 holdings, versus the category’s 18.0% average. And finally, in terms of portfolio turnover, on a year-over-year basis, 15% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Below Average

Process

Janus Henderson International Sus Eq ETF earns an Average People Pillar rating. The leading driver of the rating is the combined average five-year excess return of each manager, which suggests that the funds they manage have outperformed an average manager. Management team experience, which averages 14 years at this fund, also influences the rating. Lastly, the rating is limited by the parent firm's five-year retention rate of 70%, which suggests it could do more to retain its portfolio managers.

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

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