Janus Henderson Investors expanded its line of ETFs with an actively managed strategy to help fixed-income investors access the mortgage-backed securities market.
On Thursday, Janus Henderson Investors launched the Janus Henderson Mortgage-Backed Securities ETF (NYSEArca: JMBS), which has a 0.35% expense ratio.
“JMBS gives investors seeking liquidity and minimal credit risk a strong option to potentially generate better risk-adjusted returns than low-cost passive MBS ETFs or higher fee active MBS mutual funds,” Nick Cherney, Head of Exchange Traded Products, said in a note.
The active ETF’s portfolio managers include John Kerschner, Co-Portfolio Manager of the Fund, and Nick Childs, is Co-Portfolio Manager of the Fund.
Investing in Mortgage-Related Instruments
The Janus Henderson Mortgage-Backed Securities ETF tries to achieve income and capital appreciation by investing mainly in mortgage-related instruments, according to the fund’s prospectus.
The mortgage-related fixed income instruments include residential and commercial mortgage-backed securities (“MBS”), collateralized mortgage obligations, stripped mortgage-backed securities, mortgage pass-through securities and other securities representing an interest in or secured by or related to mortgages, including asset-backed securities and securities issued by other ETFs that invest principally in MBS.
The majority of the Fund will invest in mortgage-related securities issued by the U.S. government and its agencies, such as the Government National Mortgage Association, the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation.
While the active ETF will primarily hold investment-grade securities, it may also invest in lower-rated, higher-yielding securities when Janus Capital believes that the increased risk is justified by the potential for increased return.
The portfolio managers will leverage the company’s deep research capabilities in securitized assets to help investors pinpoint inefficiencies and potential enhance returns in the MBS market.
“We are hyper-focused on modelling borrower behaviour to appreciate why and when home owners refinance or move,” Childs said in a note. “Our bottom-up approach – where we analyse the idiosyncrasies and key fundamentals of each security rather than relying on a top-down macro view – is critical to our ability to outperform the Bloomberg Barclays US MBS Index.”
For more information on new fund products, visit our new ETFs category.