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.[related_stories]
“The key in short duration bond investing is to capitalize on structural inefficiencies in fixed‐income markets,” Maroutsos said in a press release. “We believe we can better position this fund to outperform through market cycles by actively looking for value across sectors and geographies using a wide range of fixed‐income instruments.”
Components may be taken across sectors and geographies using a wide range of instruments to capitalize on investment opportunities. Underlying holdings may include up to 15% speculative-grade debt and up to 70% in foreign securities, but the ETF will limit emerging market exposure to 15% and foreign currency exchange exposure to 15%. The fund may also utilize derivatives to manage or hedge risk, enhance returns or manage duration.
The ETF may include bonds, debt securities, and other similar instruments issued by various U.S. and foreign public- or private-sector entities. The instruments include high-yield bonds, commercial paper, agency mortgage backed securities, and floating rate securities. VNAL may hold up to 15% in asset-backed securities that are rated investment grade or of similar quality as determined by Janus Capital. The fund may also invest in cash or cash equivalents such as commercial paper, repurchase agreements and other short-duration fixed-income securities.
For more information on new fund products, visit our new ETFs category.