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JBBB seeks to provide capital preservation and current income by investing in floating-rate collateralized loan obligations (CLOs) of any maturity. The fund will primarily be composed of CLOs rated between BBB+ and B-, with up to 15% in below investment grade (BB+ or lower) loans, and up to 10% in CLOs (or ETFs which provide exposure to CLOs) rated above BBB+. It is important to note this funds specific credit range, as it will increase credit risk and liquidity risk relative to more senior CLO tranches. JBBB will generally invest in USD denominated CLOs, but may invest up to 30% in those…
Is JBBB's expense ratio expensive, average, or a steal for its category?
Pro reveals the verdict on a 5-tier spectrum calibrated against ICI 2025 industry averages, with strategy-aware bands so the comparison is meaningful.
CLOs were one of the best-performing income asset classes of prior years, due to aggressive Federal Reserve hikes. JBBB focuses on BBB-rated CLOs, and benefitted from the above, with significant outperformance since inception. Although the fund's performance and fundamentals somewhat worsened in prior years, both have stabilized YTD, and could improve as the Federal Reserve hikes rates.
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I assign a Sell rating to Janus Henderson B-BBB CLO ETF (JBBB), citing an unfavorable environment for mezzanine CLO tranches. JBBB's risk profile is elevated due to its exposure to leveraged credit, and loans to the software industry. Capital models show that de-leveraging can inflict capital losses on mezzanine CLO tranches, a risk now materializing in both Europe and the US.
Janus Henderson B-BBB CLO ETF (JBBB) is a Buy for income, offering a 6.5% floating yield with minimal duration risk. JBBB's mezzanine CLO tranches benefit from a substantial structural cushion, making principal loss unlikely unless defaults surge far above current levels. The yield will drift lower as the Fed cuts rates, but lower rates also support credit quality by reducing borrower stress.