Janus Debuts ESG ETF Suite

The offerings include two fixed income and three equity products.

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Reviewed by: Dan Mika
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Edited by: Dan Mika

Janus Henderson entered the ESG space today with four actively managed funds focused on sustainability and one focused on decarbonization stocks. All five funds debuted on the NYSE Arca Thursday and are listed below:

 

FundTickerExpense Ratio
Janus Henderson US Sustainable Equity ETFSSPX0.60%
Janus Henderson International Sustainable Equity ETFSXUS0.60%
Janus Henderson Net Zero Transition Resources ETFJZRO0.55%
Janus Henderson Sustainable Corporate Bond ETFSCRD0.35%
Janus Henderson Sustainable & Impact Core Bond ETF JIB0.39%

 

Each of those expense ratios is applied to the first $250 million in assets in each fund. Every dollar in managed assets over that figure is charged a 5 basis point discount, according to the funds’ prospectuses.

The funds generally take on an ESG flavor, despite eschewing that label in their names. SXUS and SSPX both aim to invest in between 30 to 50 stocks outside and within the U.S., respectively, that are aligned with trends like climate change, resource management, and a growing and aging human population. 

Nick Cherney, Janus Henderson’s head of exchange-traded products, said in an interview that the funds are intended as an alternative to passive vehicles that mainly employ negative screens to justify their label rather than having analysts determine if a company is providing an environmental or social benefit.

“We see lots and lots of passive ESG ETFs launching that we view as relatively inadequate when it comes to their approach to ESG,” he said.

JZRO invests globally in companies that its managers believe will benefit from a transition to a net-zero carbon emission economy, with a focus on materials makers, energy producers, agricultural companies and consumer staple producers.

Both of the bond funds are limited to investment-grade products. SCRD invests in corporate debt from companies involved in health care, economic development, sustainable energy and “innovation” companies deemed to be developing products that can make other firms become more sustainable.

JIB has the same stated mission but is free to invest in a mix of government debt, corporate bonds and short-term vehicles.

The funds also ban a running list of industries from their investable universes, including but not limited to alcohol producers, weapons developers, genetic engineering, meat and dairy producers, and nuclear power generators.

JZRO is subject to that list but does not specifically exclude nuclear power generators or fossil fuel power generators from its investable universe.

Cherney said portfolio managers have the discretion to take positions that may conflict with the screen or broader ESG principles if a company has a nuanced difference from the screen, such as a copper mining company that supplies renewable gridmakers but owns a mine in a country that’s primarily powered by fossil fuels.

“Should we own that company or not?” he said. “That's the kind of nuance that we're talking about.”

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Dan Mika is a reporter for etf.com. He has previously covered business for the Ames Tribune and Cedar Rapids Gazette in Iowa, and BizWest Media in Fort Collins, Colorado. Dan holds a bachelor's degree in journalism from Truman State University.