The fund follows an actively managed strategy that invests mainly in CLO tranches rated from BBB+ down to B-. It emphasizes capital preservation while capturing the benefit of mezzanine debt, which offers higher yields than senior (AAA) CLOs.

It suits investors who want more income than conventional bonds provide, and who are willing to accept credit risk in order to build a portfolio that is defensive in a rising rate environment.

Launched in 2022 by Janus Henderson, it is an actively managed ETF.

Through thorough bottom-up analysis, the fund selects high-quality CLO managers and individual issues. Because the underlying assets are floating-rate loans, the risk of price declines from interest rate changes (duration risk) is extremely low, and the fund seeks excess returns through credit spread analysis.

• The only large ETF specializing in the mezzanine CLO sector
• A zero-duration strategy that works well when rates are rising
• Credit risk management through diversification across more than 200 holdings

Assets under management (AUM) stand at $1.5B, and the expense ratio is 0.47% per year.

Unlike JAAA and PAAA shown in the table, which concentrate on highly rated AAA tranches, JBBB invests one step lower in the mezzanine tiers to deliver higher dividend income. In exchange, investors should be aware that price volatility can be greater than for AAA tranches when a credit event occurs.

With the high interest rate environment persisting, the fund has steadily paid out high monthly dividends, and thanks to low default rates backed by solid corporate earnings, it has maintained a stable price trend.

Institutional and retail money has flowed in heavily, drawn by its relatively high yield and low interest rate sensitivity compared with traditional Treasuries and ordinary corporate bonds, and its asset base is growing quickly.

The fund offers high income and low interest rate risk, but the main risks are credit rating downgrades and defaults that can occur during an economic downturn.

JAAA in the table is a senior-tranche product from the same issuer with top-tier credit quality, and PAAA is also a good alternative. If you want a somewhat broader sector exposure, consider FSEC, and if you want actively selected AAA-rated holdings, consider CLOA. JBBB suits investors who are willing to take on more risk than these funds in order to maximize yield.

These are the key factors to review before investing in JBBB. Rather than focusing on the interest rate outlook, look more closely at the credit health of individual companies and the overall economic backdrop to manage risk effectively.

This is a product whose performance is driven by credit risk rather than interest rate risk. In periods of intense market fear, wider credit spreads can cause temporary valuation losses.

It is a high-yield bond alternative suited to investors who want stable cash flow while also needing a practical defense against rising rates, and with appropriate credit risk management it can help improve a portfolio's profitability.