Janus Henderson AAA CLO ETF

JAAA

Market cap $25.2B

On this special episode of the “ETF of the Week” podcast, VettaFi's Head of Research, Todd Rosenbluth, discussed record ETF inflows with Chuck Jaffe of Money Life. The pair discussed why this might be happening, highlighted some standout funds, and more.

The ETF wrapper has come along in leaps and bounds since the ETF rule's arrival in 2019. The tax-efficient, flexible, transparent wrapper offers myriad advantages for their investors, but historically, equity ETF adoption has happened faster.

Interest rates remain elevated, with high-quality, lower-risk bonds and income securities offering competitive yields. Market volatility has some investors worried, and looking for safer investments. ETFs focusing on high-quality, lower-risk, short-term securities seem like particularly interesting choices right now. A quick look at four of these follows.

With $1.01 trillion of net inflows for the year, ETFs are sure to break the 2024 record of $1.1 trillion, likely in November. However, with $325 billion of new money as of October 15, fixed income ETFs have already hit a new milestone for the year.

The Equity Risk Premium is close to zero, while the market remains unstable due to Trump's trade threat. Traditional stocks and bonds offer similar returns but with asymmetric risk and high duration. ETFs on AAA CLOs (like JAAA) could offer positive real yields and stability, with almost zero duration.

Unconventional approaches still lead to good results.

The chances for a notable correction are certainly not low. Going into richly priced and growth-focused names might not be the smartest idea. Yet, sitting on sidelines might come with some serious opportunity costs.

Janus Henderson AAA CLO ETF offers a 5.5% yield and capital preservation through exposure to high-quality, AAA-rated CLO securities. JAAA is best suited for income-focused investors seeking stability, not those looking for capital appreciation or index-like returns. While JAAA's risk of defaults is historically low, distributions may trend downward if the Fed continues to cut interest rates.

Active ETFs issuance has been torrid since 2021. At the start of that year there were 535 active ETFs versus 1,959 passive ETFs.

When you retire, a significant shift in your investing strategy is necessary.