Janus Henderson launches securitized income ETF

Nov 15th, 2023 | By | Category: Fixed Income

Janus Henderson Investors has expanded its ETF line-up with a new actively managed fund that aims to capture high-income opportunities within the US securitized fixed income market.

Janus Henderson launches securitized income ETF

The ETF targets high-income opportunities across the securitized fixed income market in the US.

The Janus Henderson Securitized Income ETF (JSI US) has been listed on NYSE Arca, coming to market with $50 million in initial assets.

Securitization refers to the process of bundling together pools of financial assets (such as residential and commercial mortgages, credit card receivables, auto loans, and student loans) to create new securities which are then divided and sold to investors in different tranches.

According to Janus Henderson, securitized products can help diversify traditional fixed income portfolios by potentially reducing credit risk, dampening overall duration, and increasing average credit quality.

John Kerschner, Head of US Securitized Products at Janus Henderson Investors, commented: “Securitized credit presents a unique investment avenue, offering attractive yields with relatively low interest rate risk. JSI is designed to bridge the gap for investors, granting them access to key areas of the securitized market.”

Nick Cherney, Head of Innovation at Janus Henderson Investors, added: “The securitized market is vast and ripe with opportunities. JSI is our latest initiative to cater to client needs, complementing our diverse array of innovative ETFs. Our focus remains on understanding and addressing the challenges faced by our clients.”

Investment approach

The Janus Henderson Securitized Income ETF invests in a range of securitized products including asset-backed securities (ABS), collateralized loan obligations (CLOs), agency and non-agency mortgage-backed securities (MBS), and collateralized mortgage obligations (CMOs).

The fund may also engage in “to be announced” commitments when purchasing MBS, potentially leveraging its holdings. Additionally, it can enter into mortgage dollar rolls for short-term transactions.

The ETF has the flexibility to invest in securities of various maturities and interest rate structures. The fund predominantly targets investment-grade securities with a limit of 40% for securities rated below investment grade.

The fund may employ derivatives, including swaps, futures, and options, to manage or hedge portfolio risk related to interest rates and credit.

The ETF comes with an expense ratio of 0.50%.

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