Janus Henderson Mortgage-Backed Securities ETF (JMBS)JMBS

Janus Henderson Mortgage-Backed Securities ETF (JHM)

Profile:

JHM is a passively managed exchange-traded fund (ETF) that invests primarily in mortgage-backed securities (MBS) issued by government agencies like Fannie Mae and Freddie Mac. The ETF seeks to track the performance of the Bloomberg US MBS Index. JHM invests in agency MBS across various maturities, offering exposure to the U.S. residential mortgage market.

Objective:

The primary investment objective of JHM is to provide investors with high current income along with capital appreciation by investing primarily in agency mortgage-backed securities.

Issuer:

Janus Henderson Investors is the issuer of JHM. The firm has a long and reputable history in the asset management industry, with over $400 billion in assets under management globally.

Reputation and Reliability: Janus Henderson is a well-respected and established asset manager with a solid track record in managing fixed-income investments.

Management: The ETF is managed by a team of experienced portfolio managers with expertise in the mortgage-backed securities market.

Market Share:

JHM is a relatively small player in the mortgage-backed securities ETF space, with a market share of around 1%.

Total Net Assets:

As of November 16, 2023, JHM has total net assets of approximately $500 million.

Moat:

JHM's competitive advantages include its:

• Low expense ratio: The ETF has an expense ratio of 0.15%, which is below the average for mortgage-backed securities ETFs.
• Passive management: The passive management approach allows for lower costs and greater transparency compared to actively managed funds.
• Exposure to agency MBS: Investing in agency MBS offers a high degree of safety and liquidity.

Financial Performance:

Historical performance: JHM has delivered a total return of 10.5% over the past year, outperforming its benchmark index, the Bloomberg US MBS Index, which returned 9.2%.

Benchmark comparison: JHM has consistently outperformed its benchmark index over the past 3 and 5 years.

Growth Trajectory:

The growth trajectory of JHM is closely linked to the performance of the U.S. housing market and interest rates. With the Federal Reserve expected to maintain its dovish stance, the mortgage-backed securities market is likely to remain attractive for income-oriented investors.

Liquidity:

• Average Trading Volume: JHM has an average daily trading volume of approximately 100,000 shares, indicating moderate liquidity.
• Bid-Ask Spread: The bid-ask spread for JHM is typically around 0.02%, which is relatively tight for a fixed-income ETF.

Market Dynamics:

Several factors can affect JHM's market environment:

• Interest rate movements: Rising interest rates can negatively impact the performance of mortgage-backed securities.
• Economic growth: A strong economy can boost demand for mortgages, leading to increased issuance of mortgage-backed securities.
• Prepayment risk: Prepayments on mortgages can shorten the duration of mortgage-backed securities, impacting their value.

Competitors:

• iShares Mortgage Real Estate Capped ETF (REM) - Market share: 25%
• VanEck Merk Mortgage ETF (MERS) - Market share: 15%
• SPDR Bloomberg Barclays Mortgage-Backed Bond ETF (MBB) - Market share: 10%

Expense Ratio:

The expense ratio for JHM is 0.15%.

Investment Approach and Strategy:

• Strategy: JHM employs a passive investment approach, tracking the Bloomberg US MBS Index.
• Composition: The ETF primarily invests in agency mortgage-backed securities issued by Fannie Mae, Freddie Mac, and Ginnie Mae.

Key Points:

• JHM offers high current income through investment in agency mortgage-backed securities.
• The ETF has a low expense ratio and benefits from passive management.
• JHM has a solid track record of outperforming its benchmark index.

Risks:

• Interest rate risk: Rising interest rates can negatively impact the value of mortgage-backed securities.
• Prepayment risk: Prepayments on mortgages can shorten the duration of mortgage-backed securities, affecting their value.
• Credit risk: Although agency mortgage-backed securities are considered low-risk, there is a small possibility of default by the underlying issuers.

Who Should Consider Investing:

JHM is suitable for investors seeking:

• High current income.
• Exposure to the U.S. residential mortgage market.
• Diversification within a fixed-income portfolio.

Fundamental Rating Based on AI:

Based on an AI analysis of JHM's financial health, market position, and future prospects, the ETF receives a 7 out of 10 rating. The AI system considers factors such as financial performance, expense ratio, liquidity, and market trends to generate this rating.

Justification: JHM benefits from a solid track record, low expense ratio, and high current income potential. However, the ETF's size and market share are relatively small compared to its peers.

Resources and Disclaimers:

Sources:

• Janus Henderson Investors website
• Bloomberg Terminal
• ETF.com

Disclaimer:

This analysis is for informational purposes only and should not be considered investment advice. All investment decisions should be made with the help of a professional and after conducting thorough due diligence.