Active MBS ETF Planned

Janus has filed for what would be the first actively managed mortgage-backed securities ETF.
Reviewed by: Staff
Edited by: Staff


Janus Henderson recently filed to launch an ETF that would track the U.S. mortgage-backed securities market. The Janus Henderson Mortgage-Backed Securities ETF (JMBS) will look to achieve high total returns through a combination of income generation and capital appreciation, according to its prospectus.

In an unusual move, Janus issued a press release about the filing. There are currently no actively managed ETFs covering the MBS space, which is a $6.5 trillion market, according to the release. The sector accounts for 28% of the Bloomberg Barclays US Aggregate Bond Index, the document notes.

Investment Approach

The prospectus says that the fund will invest primarily in mortgage-backed fixed-income securities across a range of maturities. JMBS’ main objective is to outperform the Bloomberg Barclays US MBS Index Total Return Value Unhedged USD by 0.50% while maintaining a high correlation with the index.

Its investments can include residential and commercial MBS; collateralized mortgage obligations; mortgage pass-through securities and other mortgage-related vehicles that are mostly issued by the U.S. government or its mortgage-related agencies. The mortgage-related debt in the portfolio will mainly be investment-grade, though the fund can shift into high-yield debt if the managers deem it a good prospect for higher returns. It can also invest in derivatives to execute its strategies and engage in securities lending.

JMBS’ managers will use a bottom-up approach that involves evaluating each security, while taking into consideration the fund’s risk allocations and volatility levels, the prospectus notes.

The fund is slated to list on the NYSE Arca, but the filing did not include an expense ratio.

The press release from Janus Henderson projects that the fund will likely launch in September of this year.

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