Key Highlights

  • Janus Henderson USD Mortgage-Backed Securities Active Core UCITS ETF (LSE:JMBD) gives UCITS investors access to US agency mortgage-backed securities.
  • Fund Assets are approximately $200 million to $400 million.
  • Indicative Yield to Maturity is around 5.5% to 6%.
  • One-year NAV total return is roughly 3% to 4% in US dollars.
  • Agency MBS offer government-related Credit quality with a spread over Treasuries.

Fund Overview

Janus Henderson USD Mortgage-Backed Securities Active Core UCITS ETF (LSE:JMBD) is a UCITS version of a strategy that has gathered substantial assets in the US. It opens up the $9 trillion US agency MBS market, one of the largest and most liquid bond markets in the world, to European and UK investors through the ETF wrapper.

Fund Snapshot

  • AUM: approximately $200 million to $400 million.
  • Approx NAV total return: around 3% to 4% over one year.
  • Indicative yield: roughly 5.5% to 6% yield to maturity.
  • Ongoing charge: about 0.30%.
  • Benchmark: Bloomberg US MBS Index.
  • Distribution: distributing USD class.

Fund Objective, Focus and Portfolio Composition

The fund aims to outperform the Bloomberg US MBS index by investing mainly in agency mortgage-backed securities issued or guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae. Managers actively select coupons, pools and issuers, and can use the to-be-announced market to manage exposure.

The portfolio is dominated by agency MBS, typically above 90%, with the balance in cash, Treasuries and small allocations to high quality securitised assets. Geographic exposure is 100% US residential mortgages. Coupon exposure is spread across low-coupon pools from 2020-2021 and higher-coupon pools issued since 2023. Duration is around 5.5 to 6 years, and credit quality is effectively AAA-equivalent because of agency backing.

Why MBS Are Back on the Radar

Several large asset managers have argued that agency MBS offer one of the better Risk-adjusted yields in high quality fixed income, because their spread over Treasuries is wider than that of A-rated corporate bonds.

Performance Review

Over the past year, the fund has delivered returns broadly in line with or slightly ahead of the Bloomberg US MBS Index, as active coupon selection helped offset rate-driven price declines. Higher-coupon pools issued since 2023 have generated strong income, while lower-coupon pools from 2020 and 2021 have been more sensitive to rising yields.

Income is a central part of the Investment case. With Mortgage rates elevated and refinancing low, monthly cash flows from the portfolio are relatively predictable, and reinvestment takes place at today’s higher yields. For sterling-based investors, returns also reflect movements in the US dollar, which has firmed on Fed rate-hike expectations.

Market Backdrop and Latest Trends

US mortgage-backed securities have been shaped by the same rate Volatility that has rattled Treasuries in 2026. The Federal Reserve kept its target range at 3.75%-4.00% in October, and after US employers added 165,000 jobs in the latest payrolls report, markets moved to price a high probability of a December rate increase. The 10-year Treasury Yield touched about 5.35% during the autumn sell-off before settling back near 5%. Mortgage rates have stayed high as a result, keeping refinancing activity subdued and housing turnover low.

For MBS investors, low refinancing activity is a double-edged sword. It reduces prepayment risk, which supports the value of higher-coupon bonds, but it also extends the duration of low-coupon pools, making them more sensitive to rate moves. Spreads on agency MBS versus Treasuries have remained wider than their long-term average, a point highlighted by several fixed income managers as a reason to favour MBS over investment grade corporate bonds, where spreads are tighter.

The Middle East conflict, now in its ninth month, pushed Brent Crude above $126 at its peak before oil fell more than 10% in a matter of days after the US midterm elections. Inflation concerns tied to energy prices have kept the Fed cautious, while the debate over the size of the Fed’s Balance Sheet and potential changes to Fannie Mae and Freddie Mac’s status have also featured in Bloomberg and Reuters coverage. Any move toward ending government conservatorship could affect MBS spreads.

What Investors Can Watch Going Forward

Several signals are likely to shape the next leg of performance for Janus Henderson ICAV - Janus Henderson USD Mortgage-Backed Securities Active Core UCITS ETF (LSE:JMBD):

  • The Fed’s December decision and guidance on its balance sheet runoff.
  • Mortgage rates and housing data, which affect prepayment speeds.
  • Policy announcements on the future of Fannie Mae and Freddie Mac.
  • MBS spreads versus Treasuries and investment grade corporate bonds.
  • Bank Demand for MBS, linked to regulatory Capital rules.
  • Interest rate volatility, which tends to widen MBS spreads.

Key Risks to Consider

Key risks include Interest Rate risk, prepayment and extension risk, spread risk, active management risk and US dollar Exchange Rate risk for sterling investors. Policy changes affecting the government-sponsored enterprises could also alter MBS valuations.

Bottom Line

Janus Henderson ICAV - Janus Henderson USD Mortgage-Backed Securities Active Core UCITS ETF (LSE:JMBD) offers a distinctive way to diversify away from corporate credit while keeping high credit quality. With MBS spreads still relatively wide, active selection of coupons and pools could add value as the rate cycle evolves.