Janus Capital Group, Inc., begun trading a new Short Duration Income ETF, the Janus Short Duration Income ETF (Nyse Arca: VNLA), on Thursday, November 17, 2016. Here is a synopsis of the new ETF:
|Symbol: EFAS||Exchange: NYSE ARCA|
|Name: Janus Short Duration Income ETF||Net Expense Ratio: 0.35%|
The Janus Short Duration Income ETF is an actively managed fixed income ETF with the potential to deliver returns above cash. The strategy seeks to provide a steady income stream with capital preservation across various market cycles. The Fund seeks to consistently outperform the LIBOR 3-month rate by a moderate amount through various market cycles while at the same time providing low volatility.
The Fund pursues its investment objective by investing, under normal circumstances, its net assets in a portfolio of fixed income instruments of varying maturities. As a general indication of the Fund’s risk/return profile, the portfolio managers will seek to select fixed-income instruments that can provide a return of 2-3% above the LIBOR 3-Month (US$) rate (LIBOR). The Fund seeks value across sectors and geographies using a wide range of instruments to capitalize on investment opportunities to
maximize current income while at the same time providing low volatility. The Fund seeks to take advantage of market mispricings and dislocations caused by structural inefficiencies in the fixed income market including: (1) the bias of cash bond indices towards securities from North America and Asia; and (2) compositional bias in bond indices towards historical benchmark performance and structure.
The types of fixed income instruments in which the Fund may invest include bonds, debt securities, and other similar instruments issued by various U.S. and foreign public- or private-sector entities. Such instruments include high-yield bonds, commercial paper, agency mortgage-backed securities, and floating rate securities. In addition, the Fund may invest up to 15% in asset-backed securities that are rated investment grade or of similar quality as determined by Janus Capital. The Fund may also invest in cash or cash equivalents such as commercial paper, repurchase agreements and other short-duration fixed-income securities. Due to the nature of the securities in which the Fund may invest, it may have relatively high portfolio turnover compared to other funds.
Under normal circumstances, the average portfolio duration of the Fund generally will be within 0-2 years of LIBOR. The Fund will invest in both investment grade and below investment grade fixed income securities, but intends to generally invest 15% or less of its net assets in below investment grade fixed income securities (junk bonds).
The Fund may invest up to 70% of its assets in foreign securities. Within the Fund’s exposure to foreign securities, it may invest in emerging markets, including frontier markets (which are even less developed than emerging market countries), but will normally limit emerging markets investments to 15% of its net assets, measured at the time of purchase. The Fund will normally limit its foreign currency exchange exposure to 15% of its total assets. The Fund may limit its foreign currency exchange exposure by hedging through the use of forward contracts, cross-currency swaps, currency futures and options.
The Fund may invest its assets in listed or unlisted derivatives, which are instruments that have a value derived from, or directly linked to, an underlying asset, such as fixed-income securities, commodities, currencies, interest rates, or market indices. In particular, the Fund may use index and single-name credit default swaps, forward foreign interest rate swaps, cross-currency swaps, swaptions, currency futures, options, and structured notes. The Fund may use derivatives for various investment purposes, such as to manage or hedge portfolio risk, enhance return, or manage duration.
Fund Top Holdings (11/18/16):
|CNOOC Nexen Finance (2014) ULC 1.625% 30-APR-2017||2.41%|
|Australia & New Zealand Banking Group Ltd/New York NY|1.215|09/23/2019||2.41%|
|Optus Finance Pty Ltd. 4.625% 15-OCT-2019||2.15%|
|Westpac Banking Corporation 3.625% 28-FEB-2023||2.05%|
|Australia and New Zealand Banking Group Limited 3.45% 08-AUG-2022||2.04%|
|Ally Financial Inc. 5.5% 15-FEB-2017||2.04%|
|Scentre Group Trust 1 2.375% 05-NOV-2019||2.01%|
|Goldman Sachs Group, Inc. FRN 04-JUN-2017||2.01%|
|American Honda Finance Corp. FRN 19-NOV-2018||2.00%|
|Sinopec Group Overseas Development (2016) Ltd. 1.75% 29-SEP-2019||1.98%|
VNLA Home Page
Here is a comment from Nick Maroutsos, VNLA’s portfolio manager:
“The key in short duration bond investing is to capitalize on structural inefficiencies in fixed-income markets. We believe we can better position this fund to outperform through market cycles by actively looking for value across sectors and geographies using a wide range of fixed-income instruments.’’