Janus Henderson presents plans for CLO-ETF
For investors longing for one ETF Focus on secured loan commitments (CLO) the wait could soon be over when Janus Henderson announced he had filed plans with the Securities and Exchange Commission (SEK) for the Janus Henderson AAA CLO ETF.
The actively managed ETF is traded under the ticker “JAAA” and could come on the market at the end of October, according to the statement. A CLO is a single security backed by a basket of debt.
“Secured loan obligations (CLO) are often backed by low-credit corporate loans or loans taken out by private equity firms Leveraged buyouts. A secured loan obligation is similar to a secured mortgage obligation (GMO), except that the underlying debt is of a different nature and nature – a corporate loan instead of a mortgage “, according to Investopedia.
The fixed income ETF Universe, although it is growing rapidly, currently offers none CLO Product.
“The new actively managed Exchange Traded Fund (ETF) focused on AAARated collateralized loan obligations (“CLOs”) are expected to be the first of their kind in the industry and demonstrate Janus Henderson’s innovative strategy, ”said Janus Henderson. “The investment objective of the Fund is to achieve capital preservation and current income by seeking high quality floating rate exposure AAA-rated CLOs. “
Focusing on highly rated CLOs could YES an advantage for investors, as CLOs are often viewed as having an increased risk of default.
“With a CLO, the investor receives scheduled debt payments on the underlying loans and assumes most of the risk in the event of the borrower’s default, ”notes Investopedia. “In exchange for taking over the taking default Risk, the investor is offered greater diversity and the potential for above-average returns. A default occurs when a borrower fails to make payments on a loan or mortgage for an extended period of time.
The Janus Henderson statement does not mention an expense ratio for YES.
“The fund is managed by the portfolio manager John P. Kerschner, CFA and Nick Childs, CFA. Jessica Shill will act as Assistant Portfolio Manager for the fund, ”the announcement said.