The Janus Henderson B-BBB CLO ETF (JBBB +0.01%) may sound intimidating at first glance. After all, the name resembles the collateralized debt obligations tied to the 2008 financial crisis.
But while the structures share similarities, the underlying assets are different. The collateralized loan obligations (CLOs) in this exchange-traded fund (ETF) are backed by pools of corporate loans -- not subprime mortgages.
However, the “B-BBB” label matters. It tells you this ETF owns tranches of CLOs that sit lower in the capital structure, which means more credit risk compared to AAA-rated CLOs.
That does not make these securities bad investments, but they are far from beginner-friendly. If you’re thinking about using this ETF as part of a long-term income portfolio, it’s important to understand how it’s built and the trade-offs involved.
Exchange-Traded Fund (ETF)
What is the Janus Henderson B-BBB CLO ETF?
To understand this ETF, start with the loans at the core of every CLO. CLOs are created from large pools of senior loans -- secured, floating-rate loans that sit at the top of a company’s debt structure.
These loans pay interest tied to a benchmark such as the Standard Overnight Funds Rate (SOFR), the amount charged for overnight borrowing, and investors like them because they reset frequently and offer protection against rising rates.
Once pooled, these loans are sliced into tranches. The highest tranches (AAA, AA, A) receive first priority for interest and principal payments and take losses last. As you move down the structure -- to BBB, BB, and B -- the yield increases, and so does the credit risk.
BBB is the lowest credit rating still considered investment grade. Dropping to BB or B means entering high-yield, or “junk,” territory. Lower tranches experience more volatility, wider price swings, and greater exposure to defaults -- but they also offer higher income.
This ETF launched in January 2022 and currently manages just over $1.24 billion in assets.
NYSEMKT: JBBB
Key Data Points
How to buy the Janus Henderson B-BBB CLO ETF
Step 1: Open your brokerage account: Log in to your brokerage account where you handle your investments.
Step 2: Search for the ETF: Enter the ticker or ETF name into the search bar to bring up the ETF's trading page.
Step 3: Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this ETF.
Step 4: Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
Step 5: Submit your order: Confirm the details and submit your buy order.
Step 6: Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Holdings of the Janus Henderson B-BBB CLO ETF
This ETF holds 220 securities and has a portfolio turnover rate of 74.78%, meaning a substantial portion of the portfolio is replaced over the course of a year. That’s normal for CLO strategies, which frequently rotate among new deals as older ones amortize or reset.
Its effective duration is just 0.17 years. Duration measures interest-rate sensitivity, and such a low figure reflects the floating-rate nature of CLO tranches. These holdings often adjust quickly when interest rates move, which reduces price volatility tied to rate changes.
The holdings themselves can be opaque. For example, you might see something like:
Carlyle US CLO 2020-2 Ltd | 6.75798 | 01/25/2035, 6.76%, 01/25/35.
This tells you the CLO deal name, coupon, and maturity date. But it does not show the underlying loans.
Remember, each CLO tranche is backed by a pool of dozens or hundreds of loans, and while it’s sometimes possible to find deal documents online, it’s not nearly as transparent as a standard bond ETF holding a list of individual public issuers.
Should I invest in the Janus Henderson B-BBB CLO ETF?
This ETF is designed for investors who knowingly accept higher credit risk in exchange for higher income.
While it benefits from the same structural safeguards found in CLOs generally, it does not have the same risk profile as AAA CLO ETFs.
Lower-rated tranches take losses sooner, are more sensitive to economic downturns, and can experience deeper drawdowns during recessions.
If you’re stretching for yield and understand what you’re buying, this ETF may serve a role as a satellite income holding.
But if you’re a beginner, or if you prefer maximum stability, sticking with AAA CLO ETFs is usually the more conservative choice.
Does the Janus Henderson B-BBB CLO ETF pay a dividend?
Yes. The current 30-day SEC yield is 6.62%, and distributions are paid monthly.
Expense Ratio
What is the Janus Henderson B-BBB CLO ETF’s expense ratio?
The expense ratio is 0.48%, or $48 per $10,000 invested. That’s neither cheap nor expensive for securitized credit ETFs -- it sits roughly in the middle of the pack.
Related investing topics
Historical performance of the Janus Henderson B-BBB CLO ETF
1-Year | 3-Year | |
Net Asset Value | 6.64% | 11.29% |
Market Price | 6.24% | 11.69% |
The bottom line on the Janus Henderson B-BBB CLO ETF
For most investors, the jump from AAA CLOs to B-BBB CLOs represents a significant increase in credit risk.
The extra yield is not a free lunch -- lower tranches absorb losses faster and respond more sharply to economic stress.
Unless you have a strong reason to reach for additional income, the safer path is typically staying in the highest-quality AAA CLO ETFs.
But for investors who understand and accept the risks, this ETF may offer an appealing blend of yield and diversification.
