A New Active Short-Term Bond ETF to Play Rising Rate Risks

Janus Capital Group launched an actively managed short-duration bond ETF to help investors generate steady income and maintain capital preservation for the changing environment ahead.

The Janus Short Duration Income ETF (NYSEArca: VNLA) began trading Thursday, November 17. VNLA comes with a 0.35% expense ratio.

The active ETF will be monitored by Nick Maroutsos, Co-Portfolio Manager of the Fund, and Dan Siluk, Co-Portfolio Manager of the Fund. The two are part of a team that has been managing short duration income strategies for almost 10 years.

“Investors have embraced actively managed fixed‐income ETFs as they look for expert management to navigate low cash returns and potentially rising rates, while still enjoying the structural benefits of ETFs,” Nick Cherney, Senior Vice President and Head of Exchange Traded Products for Janus Capital Group, said in a press release.

As opposed to traditional beta-index funds, active bond funds may better equipped to adapt to changes in the fixed-income environment ahead, such as a Federal Reserve interest rate hike.

VNAL will try to provide income, preserve capital and seeks to consistently outperform the LIBOR 3-month rate by a moderate amount across various market cycles while limiting volatility, according to the prospectus.

The portfolio managers will select fixed-income instruments with a return of 2% to 3% above the LIBOR 3-Month USD rate. The portfolio’s duration will generally be within zero to two years of LIBOR.