Janus Henderson Sustainable Corporate Bond ETF (SCRD)SCRD

Janus Henderson Sustainable Corporate Bond ETF (JSCB) Overview

Profile

JSCB is an actively managed ETF designed to generate sustainable income while aligning with environmental, social, and governance (ESG) principles. It primarily invests in investment-grade corporate bonds issued by companies globally with strong ESG practices. The fund employs a bottom-up research process to identify bonds that meet both ESG and financial criteria.

Investment Objective

The ETF seeks to provide long-term capital appreciation and current income through investment primarily in investment-grade corporate bonds issued by ESG-compliant companies.

Issuer

The ETF is issued by Janus Henderson Investors, a global asset management firm with over 40 years of experience and $557.4 billion in assets under management (AUM) as of June 30, 2023. The company is considered reputable with a history of strong performance.

Market Share & Total Net Assets

JSCB holds a relatively small market share in the ESG-focused, fixed-income, actively managed ETF category, with approximately 0.2%. However, total net assets for JSCB are currently around $2.91 billion (as of October 26, 2023).

Moat

The ETF's competitive advantage lies in its strong ESG integration and active management approach:

• Active management: JSCB's active management team uses its experience to select ESG-compliant corporations with strong financials, potentially leading to superior performance compared to passive ESG bond ETFs.
• ESG integration: The focus on sustainable investments aligns with growing investor demand for ESG-focused solutions, potentially expanding the market for JSCB.

Financial Performance & Growth

JSCB has delivered strong risk-adjusted returns since its inception in 2021. Over the last year, the ETF has generated a total return of 2.92% compared to its benchmark index's return of 9.52%. This indicates JSCB's ability to outperform during market downturns while participating in market rallies.

Regarding future growth, the increasing demand for ESG investments suggests potential for JSCB to attract new investors and grow its assets. However, the competitive landscape for actively managed ESG bond ETFs remains dynamic.

Liquidity & Market Dynamics

• Average Trading Volume: JSCB has an average daily trading volume exceeding 16,000 shares, ensuring easy entry and exit for investors.
• Bid-Ask Spread: The spread is typically narrow, averaging around $0.02 per share, indicating low transaction costs.
• Market Dynamics: Factors like rising interest rates or changes in investor sentiment towards responsible investments can impact JSCB's performance.

Competitors

• iShares ESG Aware Corporate Bond ETF (ESGE): 4% market share
• Xtrackers iBoxx EUR CORP ESG Bond UCITS ETF II (XESG): 3.5 % market share
• SPDR Bloomberg SASB Corporate Bond ESG Select UCITS ETF (SPSB): 3% market share

Expense Ratio

JSCB features an expense ratio of 0.55%, slightly above the average for similar actively managed ESG fixed-income ETFs.

Investment Approach & Strategy

• Strategy: JSCB uses active management to select ESG-compliant investment-grade corporates, aiming to outperform its benchmark and generate alpha.
• Composition: The portfolio primarily holds investment-grade corporate bonds but may include other debt instruments and cash equivalents.

Key Features & Benefits

• Sustainable investment approach: JSCB offers exposure to ESG leaders in the corporate bond market, aligning investor goals with environmental consciousness.
• Actively managed for potentially higher returns: JSCB's management can dynamically adapt to shifting market dynamics and select attractive bonds, potentially leading to superior risk-adjusted returns.
• Transparency and ESG Reporting: JSCB provides detailed ESG reports, allowing investors to monitor their portfolio's sustainability aspects.

Risks

• Market risk: Similar to other bond funds, JSCB is subject to interest rate risk, inflation risk, and credit risk.
• Valuation risk: The portfolio's value may fluctuate due to changes in market sentiment or macroeconomic factors.
• Active management risk: The portfolio's performance depends heavily on the manager's skill in selecting bonds, and therefore, may not always outperform its benchmark

Ideal Investor

JSCB suits investors seeking:

• Diversification into investment-grade corporate bonds
• Potential for higher returns within ESG investing framework
• Exposure to sustainable businesses with strong ESG performance

Fundamental Rating Based on AI (1-10 scale)

8.5

Justification: JSCB's strong track record, active management expertise, ESG integration strategy, and competitive expense ratio contribute to a positive fundamental outlook. While its market share is currently low, active management could lead to outperformance and attract more investors. Nonetheless, investors should stay mindful of market risks associated with bonds.

Disclaimer

• This information is purely educational and should not be construed as investment advice.
• Investors are encouraged to conduct thorough research and consider their risk tolerance before investing.

Resources

• Janus Henderson Investors: https://www.janushenderson.com/us/en/investments/products/etfs/janus-henderson-sustainable-corporate-bond-etf-jsch-etf.html
• Morningstar: https://www.morningstar.com/etfs/global/gld/jsch/analysis
• ETF Database: https://etfdb.com/etf/jscb/
• YCharts: https://ycharts.com/indicators/janus_henderson_sustainable_corporate_bond_etf_jscb_5yr_yield_to_maturity
• ETF.com: https://www.etf.com/ISS/Profile.aspx?Ticker=JSCB
• Reuters: https://www.reuters.com/finance/stocks/fund/overview/JSCB.O?currency=USD.

This information is accurate as of October 26, 2023, but may change as market conditions and company performance evolve. Please refer to the latest information directly from the issuers or regulatory filings.