Janus Files for Mortgage-Backed Securities ETF

Janus Henderson Investors has filed a preliminary registration statement with the Securities and Exchange Commission to create an ETF that will focus on actively managed mortgage-backed securities (MBS).

According to Janus, they believe they are creating an ETF that will cater to an underserved $6.5 trillion U.S. agency mortgage market, accounting for 28% of the Bloomberg Barclays U.S. Aggregate Bond Index.

Given the announcement of the filing and the fact that the Federal Reserve raised interest rates last week with hints dropped that more rate hikes are to come, it might seem that the time for a mortgage-backed security ETF is a case of inauspicious timing. However, according to Mark Fleming, chief economist at First American, a title company that serves the real estate and mortgage industry, short-term rate changes to do not undermine the housing market.

Related: Mortgage Interest Rates: To Buy or Not to Buy – That is the Question

“It’s important to remember that mortgage rates, particularly the popular 30-year, fixed-rate mortgage, are benchmarked to the 10-year Treasury bond. While Federal Funds Rate hikes don’t directly drive up the yield on the 10-year Treasury, higher inflation expectations certainly do,” said Fleming. “The Fed’s decision to raise rates for the sixth time in a year and a half was primarily viewed by experts as a reaction to the possibility of higher inflation due to continued improvement in the labor market and economy in general.”

Furthermore, recent data regarding May 2018 potential home sales showed potential existing-home sales increased to a 6.11 million seasonally adjusted annualized rate, which points to a 0.8 percent month-over-month increase–a 63.8 percent increase from the market potential low in February 2011.


John Kerschner and Nick Childs will co-manage the ETF under the “JMBS” ticker symbol. The ETF will invest at least 80% of its net assets – and all, if market conditions warrant an opportunity, in a portfolio of mortgage-related, fixed-income instruments of varying maturities, with at least 80% in agency-issued MBS.