Janus Henderson rolls out active US-focused real estate ETF

Jun 25th, 2021 | By | Category: Alternatives / Multi-Asset

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Janus Henderson has drawn on the capabilities of its indirect property team for the launch of an actively managed real estate ETF in the US.

Janus Henderson rolls out active US real estate ETF

Greg Kuhl and Danny Greenberger, Co-Portfolio Managers, Global Real Estate Team, Janus Henderson.

Listed on NYSE Arca, the Janus Henderson US Real Estate ETF (JRE US) invests in listed equity securities of US and, to a lesser extent, Canadian companies operating in real estate and related property industries.

The fund is managed by seasoned portfolio managers Greg Kuhl and Danny Greenberger, both of whom have more than 15 years of experience in the industry.

Kuhl and Greenberger are members of Janus Henderson’s Global Real Estate group which manages more than $3 billion in assets under management globally.

Securities eligible for selection by the portfolio managers include common stocks, preferred stocks, REITs and real estate operating companies across any market capitalization. The fund is also permitted to invest in shares of companies through initial public offerings.

To be considered eligible for selection, companies must derive at least 50% of their revenue from the ownership, construction, extraction, financing, management, operation, sales or development of real estate, or have at least 50% of their book value in real estate assets, or own real estate holdings that account for 50% or more of the company’s enterprise value.

The fund is classified as non-diversified and permitted to hold larger positions in a smaller number of companies.

While the focus will be on the United States, the fund may invest up to 15% of its net assets in securities of Canadian issuers.

In choosing investments for the fund, the portfolio managers apply a bottom-up approach that utilizes their knowledge of issuers, including factors such as a company’s balance sheet, valuation, the strength of management, and risk-adjusted returns. In particular, the portfolio managers will target real estate companies operating in what they perceive to be the future of the sector, including cell towers, data centres, gaming REITs, and cold storage facilities.

The portfolio managers may sell a stock if they believe that its future prospects have been accurately reflected in the market price or if their original investment thesis has changed.

The fund may hold a portion of its assets in cash or other short-term instruments, such as money market instruments or money market funds, while deploying new capital, for liquidity management purposes, managing redemptions or for defensive purposes, including navigating unusual market conditions.

The fund may also lend portfolio securities in an amount equal to up to one-third of its total assets.

There are currently 20 holdings. Major positions presently include Prologis (11.76%), Alexandria Real Estate Equities (7.26%), Sun Communities (6.83%), VICI Properties (6.54%), UDR (5.50%), Essex Property Trust (5.46%), Duke Realty (5.44%), Equity LifeStyle Properties (4.98%), Invitation Homes (4.97%) and Spirit Realty Capital (4.44%).

The fund is benchmarked for performance measurement purposes against the FTSE Nareit Equity REITs Index.

Commenting on the launch, Nick Cherney, Head of Exchange Traded Products at Janus Henderson, said: “Supply and demand dynamics within the real estate market are continuously evolving, making it an asset class where active management can add meaningful value to investors. With many investors under-allocated to real estate, JRE brings Janus Henderson’s expertise in the asset class to ETF investors seeking to access its diversification, income, inflation-protection and risk-adjusted return potential.”

Greg Kuhl added: “Offering attractive valuations, structural and secular growth tailwinds and an opportunity to provide investors with protection from inflation, real estate is an asset class with the potential to create significant shareholder value and compelling returns in the coming years.”

The fund has been seeded with $10 million and comes with a net expense ratio of 0.65%.

It will line up against other actively managed US real estate ETFs including the Nasdaq-listed ALPS Active REIT ETF (REIT US) and the NYSE Arca-listed Invesco Active US Real Estate ETF (PSR US).

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