In an environment where fixed income is neither "fixed" nor providing much "income," investors may want to rethink their approach to short-term investments and traditional fixed income. Our short-duration, absolute return approach may make sense for investors looking for returns above cash or to diversify their traditional core fixed income holdings, which may have become more sensitive to interest rate moves.
Since the financial crisis, investors and institutions have flocked to cash and cash-like investments for their perceived safety. At the same time, the Fed Funds Rate has plummeted to essentially zero in an effort to spur lending and investment. For investors who have sat on the sidelines, hard-earned savings have been eroded by inflation.
Janus Short Duration Income ETF (VNLA) seeks to provide a steady income stream with capital preservation across various market cycles. The Fund seeks to consistently outperform the LIBOR 3-month rate by a moderate amount through various market cycles while at the same time providing low volatility.
VNLA's roots are in an almost decade-old absolute return strategy used by global institutions, which the Janus Global Macro Fixed Income team is pleased to offer to investors in an active exchange-traded fund (ETF) structure.
An absolute return focus allows us to use a variety of strategies and securities to implement our views and help deliver our best ideas to clients. We believe our approach can provide positive absolute returns in a variety of market environments compared to traditional benchmark-oriented fixed income investments.
Janus' Global Macro Fixed Income strategies all take the same approach to portfolio construction. Guided by our secular outlook, we start with a yield-centric foundation of short-term investments, mostly global investment grade credit, believed to have lower risk, and layer on investments intended to generate alpha.
VNLA targets fixed income instruments that can provide an absolute return of 2% to 3% above cash (3-Month USD LIBOR). The majority of the return is expected to be generated from the yield foundation, with the rest from structural alpha strategies.
Multiple levers and few constraints create the potential for steady income with low volatility regardless of market environment.
By capitalizing on structural inefficiencies in fixed income markets, we believe we will be better positioned to outperform through market cycles.
Nick Maroutsos, Portfolio Manager | Daniel Siluk, Portfolio Manager
VNLA's targeted absolute return, coupled with a focus on low volatility, may pay off when yield is hard to find and as an alternative to taking on additional risk.
Hypothetical examples are for illustrative purposes only and do not represent the returns of any particular investment. Risk measured by volatility.
The Janus Global Macro Fixed Income team is led by experienced investment professionals focused on managing strategies with absolute return objectives. Our team's expertise in unconstrained, macro style investing offers investors an exceptional approach to navigating today's markets. We serve investors around the world by employing a multi-faceted global macro investment approach that gives us flexibility in managing portfolios and allows us to capture what we consider to be among the best investment ideas for our clients.
As of 9/30/16