Janus Henderson Mortgage-Backed Securities ETF

JMBS

Market cap $6.45B

Janus Henderson's head of innovation Nick Cherney tells CNBC's Contessa Brewer the tokenization of ETFs is potentially the most transformative technology to hit financial services in decades and how the firm is getting ahead of the interest by launching products in the category. VanEck's product manager Nicholas Frasse joins the conversation.

Nick Cherney of Janus Henderson sits down with CNBC's Contessa Brewer on 'ETF Edge' to discuss the strategies investors can take to position their portfolios before the Fed decision this week and the interest in tokenization vs. taking the traditional ETF route.

The Fund returned 1.02% and the Bloomberg U.S. Mortgage Backed Securities Index returned 1.14%. Early in the quarter, MBS spreads widened in line with other fixed income sectors, as risk markets sold off amid the Liberation Day tariff announcement. Agency MBS continue to offer attractive nominal yields, while recently they have also exhibited their diversification benefits by way of low or negative correlation to equities and negative rate-spread correlation.

On Wednesday, Janus Henderson expanded its ETF lineup with the launch of the Janus Henderson Asset-Backed Securities ETF (JABS). JABS is an actively managed fund that looks to generate a mix of income and capital preservation.

Mortgage rates trade at wide spreads to treasuries and other high-quality assets. JMBS is a simple, active ETF focusing on high-quality agency mortgages. It seems marginally superior to bond benchmarks on most major metrics, including yield, returns, and risk-adjusted returns, but with few significant advantages or benefits.

At the end of April, Janus Henderson managed $31 billion in actively managed ETF assets. Approximately half of the money impressively flowed into these ETFs in the prior 12 months.

JMBS ETF offers exposure to agency mortgage-backed securities, providing income and portfolio insulation during risk-off environments with low correlation to corporate credit and equities. GSE MBS are backed by Fannie Mae, Freddie Mac, and Ginnie Mae, carrying high ratings due to implicit U.S. government guarantees. JMBS has a 7.1-year duration, closely correlated with the iShares 7-10 Year Treasury Bond ETF, making it an intermediate duration instrument.

During Lipper's fund flows week that ended November 29, 2023, investors were overall net purchasers of fund assets for the sixth week in a row, adding a net $63.6 billion. Exchange-traded equity funds recorded $2.5 billion in weekly net inflows, the ninth straight week when ETFs attracted new capital. Exchange-traded taxable fixed income funds observed a $610 million weekly inflow - the macro group's eighth straight weekly inflow.

Meet a Strategist is a feature where Evan Harp talks to different strategists about how their firms are responding to the current moment. This week, he sat down with Rob Williams, chief investment strategist of Sage Advisory.