Janus Henderson's Nick Childs on their AAA CLO ETF (JAAA)

Size and Scale

Asked why JAAA has seen such success recently, Childs noted that the product certainly has advantages from being a first mover. However, he also sees another big driver, namely: “The Fed’s raising rates at a level we haven’t seen in 40 years.”

A no-duration AAA product with yields close to 7% is eye-catching in today’s high rate environment. “To me, compared to anything else through a risk-adjusted lens, it seems pretty attractive.”

Investor Mistakes

Rosenbluth inquired about the biggest mistakes investors are currently making in the markets. Childs pointed to the certainty of total returns and outcomes as being totally dispersed. “When I think about investor portfolios really taking the income that the Fed is giving you given what they are doing from interest rates, finding things that are high-quality with the certainty in terms of outcome and total return makes a ton of sense, and you just don’t need to take that much risk to get that today,” Childs said.

High-quality fixed income is another potential solution, according to Childs. He also urged investors to think about what the Fed is doing and how that could inadvertently affect certain corners of the market. “Agency mortgages stick out incredibly well in that environment, given quantitative tightening.”