2024-02-20 08:18:46 ET
Summary
- Sustained core inflation suggests an interest rate pivot isn't a given. However, we think the probability of a mid-to-late 2024 pivot remains high.
- As such, we believe the Janus Henderson AAA CLO ETF's positive effective duration is more desirable than Janus Henderson B-BBB CLO ETF's negative duration.
- In our view, credit spreads will rise in due course, making JAAA ETF more suitable than JBBB ETF.
- Both ETFs have solid dividend profiles but the less cyclical option is probably a better way to go for now, given the volatility embedded in today's credit markets.
- The Janus Henderson AAA CLO ETF's negative Sharpe and Sortino ratios are risks worth noting. Nevertheless, we back the asset to prosper for the rest of the year.
Today's article dials in on the Janus Henderson AAA CLO ETF (JAAA) and its close counterpart, the Janus Henderson B-BBB CLO ETF (JBBB). The two funds have subtle differences that could lead to differentiated returns in the current credit environment. Although we aren't opponents of the Janus Henderson B-BBB CLO ETF, we favor Janus Henderson AAA CLO ETF for the time being, as we think the latter provides a better risk-return outlook for the remainder of the year....
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For further details see:
JAAA Vs. JBBB: Opting For Positive Duration And High Quality