Janus Henderson U.S. Sustainable Equity ETF (SSPX)SSPX

Janus Henderson U.S. Sustainable Equity ETF (JHS)

Profile

Focus: The Janus Henderson U.S. Sustainable Equity ETF (JHS) is an actively managed ETF that invests primarily in US equities of companies that exhibit sustainable business practices. It uses a diversified approach across various market sectors and aims to outperform the Russell 1000 Total Return Index.

Asset allocation: The ETF invests in a portfolio of large- and mid-cap companies across various sectors, with a strong focus on industries like technology, financials, and healthcare. The portfolio also incorporates environmental, social, and governance (ESG) factors into its selection process.

Investment strategy: JHS employs a combination of fundamental and ESG analysis to identify companies with sustainable business practices and strong growth potential. The portfolio is actively managed, allowing for flexibility in responding to changing market conditions.

Objective

The primary investment goal of JHS is to deliver long-term capital appreciation while aligning with sustainability considerations.

Issuer

The issuer of JHS is Janus Henderson Investors, a global asset management firm with over $455 billion in assets under management as of September 30, 2023.

Reputation and Reliability: Janus Henderson has a strong reputation in the industry built on its long-standing history and consistent track record. The firm is known for its active management approach and commitment to responsible investing.

Management: The ETF is managed by a team of experienced portfolio managers with expertise in sustainable investing. The lead portfolio manager, Elizabeth Krier, has over 20 years of experience in the investment industry and a strong understanding of ESG principles.

Market Share and Size

JHS has a relatively small market share within the sustainable equity ETF category, representing around 0.2% as of October 26, 2023. However, its total net assets are approximately $283 million, indicating significant investor interest in the fund.

Moat

JHS's competitive advantage lies in its active management approach and focus on ESG investing. The experienced team uses a proprietary research process to identify companies with both sustainability and financial performance potential. This combination differentiates JHS from passive ESG ETFs that simply track broad market indexes.

Financial Performance

Historical performance: JHS has a relatively short track record since its inception in February 2021. It has generally outperformed the Russell 1000 Total Return Index, delivering an annualized total return of 12.2% compared to 10.2% for the benchmark.

Benchmark comparison: While the outperformance is promising, JHS has a limited track record compared to longer-established ETFs. This necessitates further observation of its performance in various market conditions.

Growth Trajectory

Sustainable investing is gaining momentum, and JHS is positioned to benefit from this trend. The increasing investor demand for ESG-focused investments and the ETF's active management approach suggest potential for growth in the future.

Liquidity

JHS has moderate liquidity with an average daily trading volume of approximately 13,000 shares. The bid-ask spread is typically around 0.1%, reflecting a relatively low cost of trading the ETF.

Market Dynamics

The market dynamics for JHS include:

• Economic indicators: A strong economy typically favors U.S. equities, potentially benefiting JHS.
• Sector growth prospects: Growth in sectors like technology and healthcare could positively impact the ETF's performance.
• ESG investing trend: The increasing demand for sustainable investments is a tailwind for JHS.

Competitors

Key competitors in the sustainable equity ETF space include:

• iShares ESG Aware MSCI USA ETF (ESGU) - Market share: 14.2%
• SPDR S&P 500 ESG ETF (EFIV) - Market share: 10.3%
• Xtrackers MSCI USA ESG Leaders Equity ETF (USSG) - Market share: 6.3%

Expense Ratio

The expense ratio of JHS is 0.45%, which is slightly higher than some passive ESG ETFs but lower than actively managed sustainable counterparts.

Investment Approach and Strategy

JHS is an actively managed ETF and does not track a specific index. The investment team selects individual stocks based on their ESG and financial analysis. The portfolio typically holds around 80-100 stocks with a diversified sector allocation.

Key Points

• Actively managed sustainable equity ETF
• Focuses on U.S. large- and mid-cap companies
• Strong ESG and financial performance
• Moderate liquidity and low expense ratio
• Potential for growth due to the increasing demand for ESG investing

Risks

• Market volatility: JHS's active management strategy may lead to higher volatility than passive ESG ETFs.
• ESG integration risk: The ETF's reliance on ESG factors could lead to performance deviations from traditional market indices.
• Competition: JHS faces competition from larger, established sustainable equity ETFs.

Who Should Consider Investing?

JHS could be suitable for investors who:

• Seek exposure to U.S. equities with a sustainability focus.
• Are willing to accept some volatility for the potential of higher returns.
• Believe in the long-term growth potential of ESG investing.

Fundamental Rating Based on AI

Based on a comprehensive analysis of JHS using an AI-based rating system, the ETF receives a 7.5 out of 10.

Justification:

• Strong historical performance and outperformance of the benchmark.
• Experienced management team with expertise in ESG investing.
• Growing market for sustainable investments.
• Moderate expense ratio.

However, the limited track record and competition from larger ETFs warrant considering other factors before investing.

Resources and Disclaimers

• Janus Henderson U.S. Sustainable Equity ETF website: https://www.janushenderson.com/en-us/individual/products/etfs-united-states/etf-janus-henderson-us-sustainable-equity-etf/
• Morningstar JHS Profile: https://www.morningstar.com/etfs/arcx/jhs/performance
• Yahoo Finance JHS Profile: https://finance.yahoo.com/quote/JHS?p=JHS

Disclaimer: This information is provided for educational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.