VNLA: Yield Has Gotten Too Low, Risks Outweigh Rewards (Rating Downgrade)
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The Janus Henderson Short Duration Income ETF (VNLA) has seen its yield decrease to 4.86% due to Federal Reserve rate cuts, offering a minimal spread over effective Fed Funds. With a significant portion of its portfolio in BBB-rated corporate bonds, VNLA is exposed to credit risk, making its risk/reward profile less attractive compared to alternatives like AAA CLO ETFs.
November 18, 2024 | 5:15 am
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Janus Henderson Short Duration Income ETF's yield has decreased to 4.86% due to Fed rate cuts, offering only a 30 bps spread over effective Fed Funds. The fund's composition includes significant corporate bonds, with 54% in BBB credits, exposing it to credit risk unlike treasury funds.
The decrease in yield to 4.86% and the high exposure to BBB-rated corporate bonds increase VNLA's credit risk, making it less attractive compared to other investment options. This is likely to negatively impact VNLA's stock price in the short term.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100