Janus Henderson B-BBB CLO Price, Forecast, Insider, Ratings, Fundamentals & Signals

CLO ETFs offer investors strong yields with little credit or interest rate risk. These are variable rate ETFs, and should see declining dividends as the Fed cuts rates. I still think they are buys, for three key reasons.

Janus B-BBB Clo ETF JBBB is probably on the radar for investors seeking momentum. The fund just hit a 52-week high and moved up 8.78% from its 52-week low price of $44.97/share.

Investment-grade bonds offer investors strong yields with low credit risk. A couple of ETFs offer exposure to these securities with some added benefits, including potential tax advantages and above-average yields. JBBB, CARY, and BOXX look like particularly strong ETFs in this space. A quick overview of these follows.

The Janus Henderson B-BBB CLO ETF offers exposure to U.S. collateralized loan obligations within the category of securitized fixed income securities. The fund has a distribution yield of 8.1% and has outperformed traditional bond ETFs with a return of 13% over the past year. We advise caution at the current level considering historically tight credit spreads, and the potential for declining interest rates making fixed-rate debt more attractive.

Collateralized loan obligations, or CLOs, are complex financial instruments consisting of a pool of loans, offering a way to invest in corporate debt with a mechanism to mitigate interest rate risk. The Janus Henderson B-BBB CLO ETF provides access to floating-rate CLOs and is a unique investment opportunity for individuals and institutions. The JBBB fund offers diversification potential and floating rate exposure, but investors should be aware of the higher credit risk associated with B to BBB-rated CLOs.

The consensus is turning against floating-rate securities but a move away from them is much too soon in our view. Recent data, such as strong payrolls and increased average hourly earnings, suggests that the Fed may take time to kickstart the rate cutting cycle. Also, markets have already priced in substantial rate cuts, leading to a significant drop in long-term rates, creating a potential risk for a back-up in longer-term rates.

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.

ETFs offer investors diversified exposure to different asset classes, including U.S. and international equities, fixed-rate and variable rate bonds. Within each market sub-segment some ETFs offer particularly compelling yields. A short, curated overview of some of these ETFs follows. Yields range from 5% - 10%.

On Seeking Alpha, I focus on dividend ETFs targeted towards income investors and retirees. Dividend ETFs focusing on bonds and fixed-income securities have seen significant dividend growth these past two years. Some offer incredibly compelling yields. Of these, five funds stand out. A quick look at these follows.

JBBB invests in CLO tranches of senior secured loans, focusing on BBB tranches. The fund yields 7.9% with below-average credit risk, a strong value proposition and risk-return profile. The fund has benefited from rising rates over the last few years, and rate cuts could impact the fund going forward.