Janus Launches B-Rated CLO ETF

Janus Henderson’s newest ETF packages the middle tier of collateralized debt obligations into a tradeable fund, producing a combination of investment-grade and junk-level assets.

The Janus Henderson B-BBB CLO ETF (JBBB) launched on the Cboe Global Markets Wednesday with an expense ratio of 0.49%. The fund has a waiver of 1 basis point in effect until March 2023.

Collateralized debt obligations, or CLOs, are actively managed securities wherein managers acquire corporate loans and combine them into a single security, then sell those securities to investors. Each share issuance, or tranche, from the CLO has a differing credit quality: The oldest tranches are first in line for payments but at a lower interest rate, while newer tranches are paid higher yields to compensate for the risk of nonpayment in the event of an underlying loan’s default.

JBBB aims to invest the majority of its assets in CLOs of at least $250 million and rated between BBB+ and B-, with a limit of 15% placed on junk-rated CLOs. The fund also can invest in CLOs with ratings above BBB in tumultuous economic times.

The fund is actively managed and fully transparent.

JBBB is twice as expensive as its older sibling fund, the Janus Henderson AAA CLO ETF (JAAA). That fund has garnered $380.3 million in assets since launching in October 2020.

Janus Henderson now has 12 ETFs with a combined $4.4 billion in assets out of the entire firm’s $419.3 billion.

Contact Dan Mika at [email protected], and follow him on Twitter