ETFs
Janus Henderson’s Opportunity to Disrupt Active Fixed Income ETFs
Janus Henderson’s entry into European ETFs is an exciting development for fund selectors looking to develop more products in active fixed income, a sector of the market ripe for disruption.
Last week, Janus Henderson announced plans to acquire Tabula Investment Management, a fixed income specialist that launched its first UCITS ETFs in 2018.
The acquisition, which is expected to be completed at the end of the second quarter, will see the US giant launch a suite of active ETFs while retaining Tabula’s existing range of 11 ETFs, which total $883 million in assets under management ( AT M).
Janus Henderson already has a suite of 11 U.S.-listed ETFs with $16.7 billion in assets under management, primarily focused on actively managed fixed income. For examplethe largest, the Janus Henderson AAA CLO ETF (JAAA), housed $9 billion in assets under management, as of May 7.
“Janus Henderson is already one of the largest issuers of fixed income ETFs in the United States and the acquisition of fixed income focused Tabula will allow it to expand seamlessly into the European and beyond,” Dan Caps, investment manager at Evelyn Partners, said ETF Feed.
The acquisition of Janus Henderson appears to be timely. Fixed-income mutual fund ETFs saw record inflows of $70 billion in 2023, according to ETFbook data, surpassing the previous figure set in 2019, as investors flocked to bonds for attractive returns.
Despite record inflows, fund selectors still lament the lack of fixed income ETFs. According to ETF Feed recent survey In its ETF Buyers Club, 36% of respondents highlighted a “limited product range” as the biggest challenge when investing in fixed income ETFs.
This is particularly true in the area of active fixed income ETFs, where product development has stagnated in recent years. Active ETF issuers’ lack of focus on fixed income seems odd given the natural inefficiencies – such as central bank ownership and index construction limits – that can be taken advantage of in this class of assets. ‘assets.
Underscoring this, the latest SPIVA Europe dashboard from S&P Down Jones Indices (SPDJI) revealed more mixed results in fixed income compared to equities, where active managers have consistently underperformed.
For example, in sterling-denominated corporate bond funds, only 24% of active managers underperformed over the past year, while 47.% underperformed in sterling-denominated corporate bonds. Statement in pounds sterling.
“In bond markets, traditional sources of excess return often favored or exploited by active managers include the adoption of higher duration (i.e., longer-term bonds), the acceptance of ‘greater credit risk and the search for additional returns by taking positions in securities. less liquid securities,” said Tim Edwards, managing director of index investing strategy at SPDJI.
Last word
It has always been difficult for new players to disrupt incumbents. However, active fixed income is an area to conquer. Janus Henderson could be in a good place.