Janus Henderson Short Duration Income ETF VNLA’s historical conservative focus on downside protection has meant the strategy has lagged many of its higher-risk peers over the long term. Recent enhancements allude to utilizing more of the risk budget. This vehicle began in 2016 by a group well-versed in flexible bond investing, though team changes in recent years have been significant. Lead responsibility for VNLA now lies with Daniel Siluk following Jason England’s departure from Janus Henderson at the end of March 2024. Siluk is adequately supported by Addison Maier, who has been with Janus Henderson since 2011.  

Siluk’s relocation to the US in early 2024 has business development efforts as the primary focus, while a secondary aim is to establish greater cohesion between the Sydney and Newport Beach offices. The generational shift from the founders and senior members over the past four years to the current team has been reasonably executed, a function of Siluk’s leadership. Time is needed for the team to re-establish itself as a solid unit. Our previous concerns around the conservatism of the investment process have been noted by Kapstream’s team. Notably, the team has identified areas to improve upside capture through active trading, higher conviction, and more credit sector rotations; the consistency and results will take time to see. That said, we expect Kapstream to retain its conservative roots. 

This strategy is built on investment-grade credit with cash periodically used to protect against downside hits. Its credit risk is materially greater than its Morningstar Category cohort, which includes US short-duration bond strategies more broadly. Returns have lagged the somewhat ambitious cash plus 2%-3% objective, but the team has largely retained its downside protection signature through conservative positioning and careful security selection. Australian dollar credit can be notable at times (it’s about 17% as of January 2024), reflecting the firm’s origins and personnel. The team has modestly altered its approach to liquidity and looked to employ tail hedges more liberally since 2020 to capture idiosyncratic opportunities. Bid-ask spreads have remained tight for the fund. The peer group of absolute return and short-duration credit income strategies does offer more attractive alternatives, but VNLA is a reasonable choice for risk-conscious investors.

Analyst Rating

Strategy enhancements are underway to aim for more upside performance.

Senior Analyst

Shamir Popat

Janus Henderson AAA CLO ETF

The strategy aims for steady income with an overriding focus on capital preservation. It targets a return of 2%-3% over the FTSE 3-month US Treasury Bill Index using instruments such as sovereign and corporate debt, mortgage- and asset-backed securities, emerging-markets debt, currencies, and floating/fixed-rate notes. A quarterly macroeconomic view (typically on a 12- to 18-month outlook) considers monetary and fiscal policies, inflation, and gross domestic product expectations. The team then tests multiple scenarios. Country outlooks are built for the main regions: the dollar bloc, Japan, Europe/UK, and emerging markets. The portfolio’s core sleeve is the anchor, typically composing 85%-90% and made up of around 100 or more issuers (at least 85% must be investment-grade). This focuses on issues such as duration, maturity/coupon, fixed versus floating, and capital structure. A higher-octane alpha sleeve is designed to deliver 50-100 basis points of return. This consists of 10-20 strategies such as relative value, volatility, directional trades, and currencies. Duration is kept within 0 to 2 years, while non-US exposure can reach 70% and high-yield and emerging markets can each reach 15%.

Average

Process

Daniel Siluk leads Kapstream and its strategies from its US office after relocating in early 2024 to focus on growing the US business under the Janus Henderson banner. Siluk has been a mainstay since joining in 2009 and became the lead manager in July 2022, after Steve Goldman’s retirement. Kapstream’s original founders Kumar Palghat and Nick Maroutsos retired in 2020 and 2021 respectively. Siluk is supported by capable and experienced professionals across the two offices in Sydney and Newport Beach. Dylan Bourke is the next most senior investment team member, having joined in 2014; Bourke, Siluk, and James Bloom form the Kapstream leadership team. The team changes over the past few years have been numerous because of the retirements, though there were additions during this period. Siluk replaced Jason England as the lead portfolio manager on the US strategies after England’s departure from the firm in March 2024. 

Prior departures have included former head of credit Raymond Lee (his role was made redundant in July 2020), his predecessor Mark Mitchell in 2015, and bank-loan-focused staffers Bob Sahota and David Saija in 2017-18. Mark Bayley joined as a credit portfolio manager in July 2020, having spent stints at FIIG and Aquasia previously, and Kris Bernie was hired in March 2022 from First Sentier Investors to bolster the macro research and inputs. The investment team no longer has an equity stake in Kapstream as Janus assumed 100% ownership, and remuneration depends on business and investment performance.

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 Short Duration Income ETF

VNLA is an actively-managed fixed income fund that aims to outperform the FTSE 3-Month US Treasury Bill Index by holding a wide range of fixed income securities with an aggregate duration target of 0-2 years.

Janus Henderson Short Duration Income ETF is a potential hedge against rising risks and volatility in stocks. The VNLA fund focuses on high-quality, shorter-dated credits to generate consistent returns and preserve capital. VNLA has a well-diversified portfolio with a strategic focus on stable sectors and has outperformed similar passive ETFs.

VNLA: A Not-So-Vanilla Fund Worth Considering

The Janus Henderson Short Duration Income ETF has performed well in 2023, with a 5.24% total return and minimal volatility. Investing in VNLA has outperformed investing in the S&P 500 since January 2022, with lower drawdowns and volatility. VNLA is expected to continue delivering high yields and outperforming the market, especially if the Fed cuts rates in mid-2024.

VNLA: Still A Buy, Will Continue To Perform

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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

VNLA is an exchange-traded fund targeting short-duration corporate bonds. With a 30-day SEC yield of 4.7% and a low duration of 0.34 years, the fund is a good choice to navigate a rising rate environment.

4.7% Yield From This VNLA Cash Parking Vehicle

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News for Janus Henderson Short Duration Income ETF ETF (VNLA)