Latest news with #JAAA
CNBC
2 days ago
- Business
- CNBC
How investors can use these high-yielding assets to diversify their portfolios
With interest rates still elevated, investors continue to find juicy yields in collateralized loan obligations. Some $4.7 trillion has flowed into CLO and bank loan exchange-traded funds since the start of the year, following 2024's record $25.6 billion in inflows , according to State Street. While investors fled the funds, along with many others, in April, the ETFs have bounced back. In May, $2 trillion in new money moved into bank loan and CLO ETFs, the ninth best month ever, State Street analyst Matthew Bartolini said in a May 31 note. CLOs are securitized pools of floating-rate loans to businesses and so their coupon payments shift alongside short-term interest rate changes. "That credit segment may continue to receive above-average inflows, given that sector's floating-rate profile and the Fed's 'wait-and-see' approach to rate cuts," Bartolini wrote. The Federal Reserve is set to meet on June 17-18 and is widely expected to hold interest rates steady, as it has been all year. Traders anticipate the next cut to come in September, according to the CME FedWatch Tool . Once the central bank starts to dial back rates, yields on CLOs are expected to gradually move down. Himani Trivedi, head of structured credit at Nuveen, said demand for the products has been steady up and down the capital structure, and expects that to continue. "There's not many floaters out there. So this has been a really good diversifier for investors," she said. "Given the volatility and potential for higher for longer, it still continues to see that flow come in, up and down the capital structure, for CLOs." Right now the Janus Henderson AAA CLO ETF (JAAA) has a 30-day SEC yield of 5.48% and a net expense ratio of 0.20%. It has $20.96 billion in assets under management as of Thursday. Some $4 billion has moved into the fund so far this year, according to FactSet. "With CLOs, you're getting a decent return," said John Kerschner, head of U.S. securitized products and a portfolio manager at Janus. "You're not taking outsized risk." JAAA YTD mountain Janus Henderson AAA CLO ETF year to date In fact, during the recent market dislocation, spreads on CLOs widened but had much less volatility than corporate credit or other parts of the bond market, he said. Liquidity was "incredible," he added. "It just showed that in these dislocations, instead of liquidity drying up, it actually gets better," Kerschner said. "There's more trading and that's what you want as an end investor." Picking up more yield Investors can pick up more yield as they move down in ratings, although those CLOs rated AAA are the first in line to get paid if the borrower declares bankruptcy. Nuveen launched its AA-BBB CLO ETF (NCLO) in December. It currently has a 6.4% 30-day SEC yield and 0.25% total expense ratio. It has collected $19 million in flows year to date, per FactSet, and has net assets of $89.4 million. NCLO YTD mountain Nuveen AA-BBB CLO ETF year to date While the ETF holds CLOs below AAA, they are still investment grade, Trivedi said. Assets with a rating of BBB- or higher by Standard & Poor's or Baa3 or better by Moody's, are considered investment grade and have a lower default risk compared to assets with lower ratings. Strong fundamentals have kept CLO defaults low, she noted. "They do provide a spread pick up, so where, even when the rates go down, you still have this additional carry," Trivedi said of those in the AA to BBB range. That carry is about 200 basis points over Secured Overnight Financing Rate (SOFR), which is the primary benchmark for CLOs, she added. "So even if SOFR was going down, against other fixed income instruments, you will get that extra credit spread for a minimal risk," she said. In addition, a recent analysis by VanEck found that over the past decade, A-rated CLOs outperformed AAA CLOs by 142 basis points a year. They also have lower volatility than investment-grade corporate bonds. BBB-rated CLOs topped AAAs by 147 basis points, the analysis found. The firm launched the VanEck AA-BBB CLO ETF (CLOB) last September. The fund invests primarily in the AA- to BB-rated tranches, has a 7.17% 30-day SEC yield and a 0.45% expense ratio. It has $116.39 million in total net assets, as of Thursday. Janus Henderson also has a lower-investment grade CLO product, the B-BBB CLO ETF (JBBB), launched in 2022. It has $1.33 billion in assets under management. The fund has seen outflows of $62 million year to date. CLOs in your portfolio While CLOs can be an attractive part of your income portfolio, investors should make sure they are diversified. When the Fed does start to cut rates, CLO yields will follow — and investors will need to make sure they also have some longer-dated bonds. Financial advisors and investment experts have been recommending intermediate-term duration assets for fixed-income investors. Janus Henderson's Kerschner likes to use AAA CLOs in more of a barbell approach, with the floating-rate assets on one end and longer duration agency mortgage-backed securities on the other. The firm's Mortgage-Backed Securities ETF (JMBS) has an effective duration of 7 years, a 5.11% 30-day SEC yield and 0.22% net expense ratio. That doesn't mean investors shouldn't have other assets in their fixed income portfolio, but he likes this barbell for at least over the next six to 12 months — and potentially longer. Nuveen sees CLOs as an excellent diversifier because they have a low correlation to most fixed-income assets. Because they are versatile, they can fill a variety of roles within the portfolio — including an alternative to short-duration bonds or a complement to high-yield bonds, the firm said in a rjecent note. Whether to stick with AAA-rated CLOs or the lower investment-grade assets depends on the investors time horizon, Trivedi explained. AAA-rated products can be seen more as a short-term cash investment, while the AA-BBB makes sense for a longer-term core investment, she said. "They can continue to get that coupon even when the rates go higher or lower," she said. "They're in a good safe spot."
Yahoo
07-05-2025
- Business
- Yahoo
Janus CEO: CLO ETFs Held Strong Amid Market Volatility
CLO ETFs experienced no 'dislocations or surprises' during the April volatility, and the structures behaved 'exactly as we had anticipated,' said Ali Dibadj, CEO of Janus Henderson Investors. As reported by Bloomberg and the Financial Times, CLO ETFs listed in the U.S. swung to wide discounts in early April—on average, more than 1% on April 4—as investors made large withdrawals during the market volatility. Even the $20 billion Janus Henderson AAA CLO ETF (JAAA), by far the world's largest CLO ETF, was changing hands more than 1% below its net asset value (NAV). CLOs, or collateralized loan obligations, are securities providing exposure to an actively managed pool of loans made to companies—typically private equity. The CLO pool is then sliced into tranches, ranging in seniority from AAA to equity, with each tranche enjoying different claims on the cash flows of the loans as well as protections from credit losses. JAAA Leads Among CLO ETFs JAAA launched in October 2020 and has demonstrated very strong asset-gathering ability. Janus Henderson boasts roughly an 80% market share in the category. Speaking at the group's first-quarter earnings call, Dibadj said, 'Investors in this ETF … tend to be medium- to long-term holders. That said, there are also some shorter-term investors, and that is where you can see the turnover in the market that creates the volatility.' The outflows highlighted that ETFs with somewhat illiquid underlying securities can detach from NAV in stressed scenarios, with the ETF itself acting as a price-discovery mechanism. For Dibadj, however, the redemptions from Janus Henderson's ETFs were soaked up as expected, with 'very little impact' on the CLO market or the underlying portfolio. 'We have seen no dislocations or surprises. In fact, we have been quite pleased with how the market reacted—in a very measured and disciplined way—exactly as we had anticipated, even given the scale of our position.' Janus Henderson debuted a European iteration of JAAA in January, and the fund has gathered $101 million in assets since inception. This article was originally published at sister publication ETF Stream. Permalink | © Copyright 2025 All rights reserved
Yahoo
26-03-2025
- Business
- Yahoo
Global Active ETF Assets Hit Record High $1.3 Trillion
Active exchange-traded funds are experiencing unprecedented growth in 2025, with global assets reaching a new record of $1.3 trillion at the end of February, according to ETFGI's latest industry report. The expansion of actively managed ETFs highlights a shift in how investors access active management, with these products now accounting for nearly 9% of the U.S. ETF market compared to just 2% in 2019, according to data from Morningstar Direct, highlighting the growing investor appetite for active strategies in the ETF wrapper. February's inflows of $51.7 billion pushed year-to-date net inflows to $103.7 billion, the highest on record and well above the $46.4 billion seen during the same period in 2024, according to ETFGI. Within the United States specifically, active ETFs are approaching the major $1 trillion milestone, with total net assets reaching $956 billion as of February 2025, according to Morningstar Direct. The active ETF market has maintained impressive momentum despite varying market conditions. While the S&P 500 decreased by 1.3% in February, active ETF assets continued to climb, according to ETFGI. According to Morningstar's manager research team, "Exchange-traded funds used to be synonymous with passive investing. At the start of 2019, actively managed ETFs represented just over 2% of the U.S. ETF market. Since then, organic growth for the active ETF market has consistently exceeded 20% per year." Equity-focused active ETFs led inflows during February, gathering $25.1 billion globally and bringing year-to-date inflows to $51.5 billion, according to ETFGI. Fixed-income active ETFs followed closely with $22.1 billion in February inflows. The Janus Henderson AAA CLO ETF (JAAA) topped the individual fund rankings with $2 billion in net new assets during February, according to ETFGI data. The JPMorgan Ultra-Short Income ETF (JPST) and iShares High Yield Muni Active ETF (HIMU) followed, with $1.9 billion and $1.8 billion in new assets, respectively. U.S. active ETF growth has been robust, with January seeing active ETFs pull in a record $43 billion, according to Morningstar Direct. The global active ETF marketplace now encompasses 3,395 products with 4,354 listings from 543 providers across 40 exchanges in 32 countries, according to ETFGI's February | © Copyright 2025 All rights reserved
Yahoo
16-02-2025
- Business
- Yahoo
TLT Leads With $802.5M for Treasury Bond ETF
The iShares 20+ Year Treasury Bond ETF (TLT) pulled in $802.5 million in new assets Thursday, bringing its total assets under management to $51.7 billion, according to daily fund flows data. The Janus Detroit Street Trust Janus Henderson AAA CLO ETF (JAAA) attracted $549 million, while the Principal U.S. Mega-Cap ETF (USMC) added nearly $301 million. The Direxion Daily TSLA Bull 2X Shares (TSLL) received inflows of $206 million, representing a nearly 4.7% increase in assets. On the outflows side, the iShares Expanded Tech-Software Sector ETF (IGV) experienced outflows of $351.5 million, while the SPDR Gold Shares (GLD) saw $213.4 million exit the fund. The iShares U.S. Home Construction ETF (ITB) recorded outflows of $137.3 million. U.S. fixed-income funds let asset class flows with over $1 billion in new assets, while U.S. equity funds added $452 million. International fixed income gained $651 million. Meanwhile, international equity funds saw outflows of $191.6 million and commodity funds lost $137 million as the ETF industry recorded total net inflows of over $1.8 billion for the day. Ticker Name Net Flows ($, mm) AUM ($, mm) AUM % Change TLT iShares 20+ Year Treasury Bond ETF 802.48 51,707.48 1.55% JAAA Janus Detroit Street Trust Janus Henderson AAA CLO ETF 549.07 21,108.77 2.60% USMC Principal U.S. Mega-Cap ETF 300.82 2,996.98 10.04% TSLL Direxion Daily TSLA Bull 2X Shares 206.23 4,438.02 4.65% SMH VanEck Semiconductor ETF 111.84 23,136.94 0.48% HAPI Harbor Human Capital Factor US Large Cap ETF 110.10 499.64 22.04% JEPI JPMorgan Equity Premium Income ETF 106.24 39,139.11 0.27% JGRO JPMorgan Active Growth ETF 83.77 5,047.14 1.66% IWF iShares Russell 1000 Growth ETF 82.15 106,922.57 0.08% JEPQ JPMorgan NASDAQ Equity Premium Income ETF 80.70 23,300.97 0.35%Ticker Name Net Flows ($, mm) AUM ($, mm) AUM % Change IGV iShares Expanded Tech-Software Sector ETF -351.52 11,149.05 -3.15% GLD SPDR Gold Shares -213.43 80,329.87 -0.27% ITB iShares U.S. Home Construction ETF -137.34 2,543.28 -5.40% IVV iShares Core S&P 500 ETF -121.27 601,969.58 -0.02% IJR iShares Core S&P Small Cap ETF -98.25 87,371.68 -0.11% ARKB ARK 21Shares Bitcoin ETF Ben of Int -97.03 4,945.67 -1.96% IVE iShares S&P 500 Value ETF -87.98 35,564.02 -0.25% MDY SPDR S&P Midcap 400 ETF Trust -86.86 24,446.21 -0.36% HDV iShares Core High Dividend ETF -81.56 10,859.46 -0.75% IWS iShares Russell Mid-Cap Value ETF -65.79 13,605.09 -0.48% Net Flows ($, mm) AUM ($, mm) % of AUM Alternatives 0.06 9,623.04 0.00% Asset Allocation 30.52 22,638.98 0.13% Commodities ETFs -137.46 175,409.33 -0.08% Currency -155.67 128,380.55 -0.12% International Equity -191.65 1,617,357.41 -0.01% International Fixed Income 651.11 271,833.01 0.24% Inverse -38.84 12,474.92 -0.31% Leveraged 193.76 128,565.22 0.15% US Equity 452.02 6,867,256.66 0.01% US Fixed Income 1,041.59 1,581,674.06 0.07% Total: 1,845.45 10,815,213.18 0.02%Disclaimer: All data as of 6 a.m. ET time the date the article is published. Data are believed to be accurate; however, transient market data are often subject to subsequent revision and correction by the | © Copyright 2025 All rights reserved Sign in to access your portfolio
