Janus Henderson Australian Fixed Interest Fund seeks to achieve a total return after fees that exceeds the total return of the Benchmark (Bloomberg AusBond Composite 0+ Yr Index), over rolling three-year periods.
The Janus Henderson Australian Fixed Interest Fund (Fund) returned -1.86% (net) and -1.83% (gross). The Fund underperformed the Bloomberg AusBond Composite 0+ Yr Index (Benchmark) by -0.33% (net) in September, which returned -1.53% over the month. The Fund continues its outperformance, beating the Benchmark over the longer term including by 0.99% (net) over the year, and 0.18% (net) since inception per annum.
Despite higher levels of income, yields rose over the month resulting in negative capital returns for longer duration bonds. We remained disciplined with adding duration throughout the month and whilst valuations are becoming attractive, we are continuing to look for better entry levels to increase conviction and active portfolio overweights.
We favour overweight positioning in semi government bonds versus government yields, mostly via New South Wales, which contributed positively as semi yields outperformed by 8bps. Active overweights in swap versus bond yields has continued its positive contribution to excess returns as spreads continue to rally to below long term averages. We are electing to take this as an opportunity to take profit and further reduce our overweight exposures.
Australian credit performed positively in September, buoyed by the embedded elevated yields while spreads were broadly unchanged. We remain cautious and selective on credit, buying in the industries we like such as inflation protected industries, senior bank paper, and high quality well collateralised Asset Backed Security (ABS) structures.
The Fund underperformed versus the Benchmark during a weak month for bonds. Despite this, the Fund has significantly outperformed in the last 12 months. A cautious overweight duration position was a negative contributor as yields rose. During September we remained patient and left duration unchanged while we await more extreme yield overshoots as an opportunity to move further overweight.
The Fund is overweight to credit versus the Benchmark, benefitting from higher levels of income. It has maintained its level of credit protection (via credit default swaps), allowing for capacity to add again into any credit weakness.
What is Janus Henderson Australian Fxd Intst Janus Henderson Australian Fxd Intst is an Managed Funds investment product that is benchmarked against Australian Bond Composite 0-10Y Index and sits inside the Fixed Income - Bonds - Australia Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Janus Henderson Australian Fxd Intst has Assets Under Management of 642.42 M with a management fee of 0.47%, a performance fee of 0.00% and a buy/sell spread fee of 0%.
How has the investment product performed recently?
The recent investment performance of the investment product shows that the Janus Henderson Australian Fxd Intst has returned 3.29% in the last month. The previous three years have returned -2.81% annualised and 3.65% each year since inception, which is when the Janus Henderson Australian Fxd Intst first started.
How is risk measured in this investment product?
There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since Janus Henderson Australian Fxd Intst first started, the Sharpe ratio is 0.42 with an annualised volatility of 3.65%. The maximum drawdown of the investment product in the last 12 months is -5.31% and -14.45% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.
What is the relative performance of the investment product?
Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The Janus Henderson Australian Fxd Intst has a 12-month excess return when compared to the Fixed Income - Bonds - Australia Index of 1.08% and 0.26% since inception.
Does the investment product produce Alpha over its Peers?
Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. Janus Henderson Australian Fxd Intst has produced Alpha over the Fixed Income - Bonds - Australia Index of 0.05% in the last 12 months and 0.01% since inception.
What are similar investment products?
For a full list of investment products in the Fixed Income - Bonds - Australia Index category, you can click here for the Peer Investment Report.
What level of diversification will Janus Henderson Australian Fxd Intst provide?
Janus Henderson Australian Fxd Intst has a correlation coefficient of 0.98 and a beta of 1.27 when compared to the Fixed Income - Bonds - Australia Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.
How do I compare the investment product with its peers?
For a full quantitative report on Janus Henderson Australian Fxd Intst and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Janus Henderson Australian Fxd Intst with the Australian Bond Composite 0-10Y Index?
For a full quantitative report on Janus Henderson Australian Fxd Intst compared to the Australian Bond Composite 0-10Y Index, you can click here.
Can I sort and compare the Janus Henderson Australian Fxd Intst to do my own analysis?
To sort and compare the Janus Henderson Australian Fxd Intst financial metrics, please refer to the table above.
Has the Janus Henderson Australian Fxd Intst been independently verified by SMSF Mate?
This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.
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Performance Commentary - August 31, 2023 The Janus Henderson Australian Fixed Interest Fund (Fund) returned 1.06% (net) and 1.10% (gross). The Fund outperformed the Bloomberg AusBond Composite 0+ Yr Index (Benchmark) by 0.32% (net) in August, which returned 0.74% over the month. The Fund continues its outperformance, beating the Benchmark over the longer term including by 1.03% (net) over the year, and 0.20% (net) since inception per annum.
Despite the intra-month volatility in bond markets, yields finished the month lower generating positive capital returns for longer duration bonds. This was coupled with higher levels of income. We continued to cautiously add duration at the margin throughout August as opportunities presented and rates lifted above our assessment of fair value. This overweight to duration was a positive contributor to performance in the month.
We hold an overweight position in semi government bonds, mostly via New South Wales, which benefitted from the fall in yields. In addition, one of the zero default risk positions we have pursued over the last year has been in the bond swap market. A recent narrowing in the spread has provided good levels of capital gain and contributed positively to performance.
Credit performed well in August, buoyed by the embedded elevated yields which offset some spread widening. We took profit on some of the credit in the portfolio, whilst maintaining high quality credit positions that we are comfortable with.
Overall, the Fund outperformed versus the Benchmark during a strong month for bonds. This adds to the significant outperformance for the Fund this calendar year vs the bond market. A cautious overweight duration position was a positive contributor and one that we have added to as the opportunity to add duration at levels above our fair value have presented during what was a volatile month.
More recently, the Fund has also been active in de-risking into the spread rally, adding some credit protection at cheapened levels, and taking profit on credit with plenty of capacity to add again into weakness.
We have identified a number of industries that currently have some challenges, however through our deep due diligence we have selected certain issuers within those sectors that we expect will be resilient. We are working with these companies to get them to issue at attractive levels for investors.
Performance Commentary - July 31, 2023 The Janus Henderson Australian Fixed Interest Fund (Fund) returned 0.58% (net) and 0.61% (gross). The Fund outperformed the Bloomberg AusBond Composite 0+ Yr Index (Benchmark) by 0.06% (net) in June, which returned 0.52% over the month. The Fund continues its outperformance, beating the Benchmark over the longer term including by 0.60% (net) over the year, and 0.19% (net) since inception per annum.
The fall in bond yields in the month generated positive capital returns for longer duration bonds. This was coupled with higher levels of income. We cautiously added duration towards the end of June when rates lifted above our assessment of fair value. This overweight to duration was a positive contributor to performance in July as yields came off their highs in the aftermath of the CPI figures which indicated an easing in inflationary pressures.
We hold an overweight position in semi government bonds, mostly via New South Wales, as well as overweight swap yields over government bond yields. The fall in yields benefitted these positions while on a relative basis to government bonds the spread was broadly unchanged.
It was a good month of outperformance from credit, returns benefitting from both additional income and some spread tightening. Overweight credit allocations were a positive contributor as a result.
Overall, the Fund outperformed versus the Benchmark during a strong month for bonds. A cautious overweight duration position was a positive contribution as we built up positions to 0.7 year overweight vs the Benchmark to take into the month.
More recently, the Fund has also been active in de-risking into the spread rally, adding some credit protection at cheapened levels, and taking profit on credit with plenty of capacity to add again into weakness.
Performance Commentary - June 30, 2023 The Janus Henderson Australian Fixed Interest Fund (Fund) returned -1.87% (net) and -1.84% (gross). The Fund outperformed the Bloomberg AusBond Composite 0+ Yr Index (Benchmark) by 0.08% (net) in June, which returned -1.95% on the month. The Fund continues its outperformance, beating the Benchmark over the longer term including by 1.19% (net) over the year, and 0.18% (net) since inception per annum.
The sharp rise in bond yields generated negative capital returns for longer duration bonds despite higher levels of income returns in 2023. We have remained cautiously positioned on duration and have recently sought to add overweight duration as yields presented some value toward the end of June.
Our overweight positioning in semi government bonds, mostly via New South Wales, as well as overweight swap yields over government bond yields both were positive contributors to return and alpha as spreads continued to tighten.
It was a good month of outperformance from credit, returns benefitting from both additional income and some spread tightening. Overweight credit allocations were a positive contributor as a result, and we continued to actively take profit on active positions added during FY23 that have moved from cheap back towards fairer valuations.
Overall, the Fund outperformed versus the Benchmark during a weaker month for bonds. A cautious overweight duration position was a modest negative contribution as we built up positions to 0.6 year overweight very late in the month as yields crested. The active choice of being overweight swap yields over government bond yields helped drive outperformance combined with additional return from spread sectors. The Fund has also been active in derisking into the spread rally, adding some credit protection at cheapened levels, and taking profit on credit with plenty of capacity to add again into weakness.
Performance Commentary - May 31, 2023 The Janus Henderson Australian Fixed Interest Fund (Fund) returned -1.20% (net) and -1.15% (gross). The Fund outperformed the Bloomberg AusBond Composite 0+ Yr Index (Benchmark) by 0.01% (net) in May, which returned -1.21% on the month. The Fund continues its outperformance, beating the Benchmark over the longer term including by 0.56% (net) over the year, and 0.18% (net) since inception per annum.
Rising yields were a headwind for interest rate duration during the month, generating negative capital returns for longer duration bonds despite higher levels of income returns in 2023.
Throughout the month we continued to favour overweight positions in semi government bonds, mostly via New South Wales. This position was increased opportunistically during March volatility when spreads became more elevated. Spreads have rallied about 15bps since then and during May we reduced overweights prior to the Victorian government budget announcement, taking profit and contributing positively to performance. Swap linked positions also outperformed government bond yields and overweight positioning added alpha as spreads continued to tighten.
Overweight credit allocations were a positive contributor, benefiting during the month mainly from additional income and constructive spread movements.
The Fund’s neutral Benchmark duration position resulted in a market beta drawdown in terms of performance which was in-line with the Benchmark return. The Fund has also been active in de-risking into the rally, taking profit on credit and semi government positions and adding some credit protection at cheapened levels.
Performance Commentary - April 30, 2023 The Janus Henderson Australian Fixed Interest Fund (Fund) returned 0.33% (net) and 0.37% (gross). The Fund outperformed the Bloomberg AusBond Composite 0+ Yr Index (Benchmark) by 0.14% (net) in April, which returned 0.19% on the month. The Fund continues its outperformance, beating the Benchmark over the longer term including by 0.28% (net) over the year, and 0.18% (net) since inception per annum.
Volatility remained persistent in April with bond yields trading in a near 35bp range, despite only ending the month slightly higher. Rates took a dip early in the month as the Reserve Bank of Australia (RBA) paused and markets remained cautious following the banking turmoil in March. However, this was soon reversed as yields rose mid-month reflecting the strong fundamentals resulting in a withdrawal of some rate cuts that had been priced in. The release of the Consumer Price Index (CPI) figures later in the month tempered enthusiasm somewhat, causing a bond market rally to finish off the month.
Spreads on semi-government bonds tracked tighter versus Treasuries, contributing positively to performance.
April was a good month for credit, with most of the attribution coming from higher coupon income as credit spreads stabilised. The Fund added additional alpha by taking advantage of opportunities that arose after the Silicon Valley Bank collapse and Credit Suisse merger. Some of the safest segments from a default risk perspective cheapened as the baby was thrown out with the bath water. These rebounded well in April as rationality prevailed. We took the opportunity to take some profit on those trades that had rallied/rolled down. We remain cautious on the corporate debt sector whilst harnessing the income from taking larger positions in the highest quality credit segments. We remain under invested in higher beta securities with powder dry for future acquisition.
April was a good month for relative performance of the Fund. Despite being cautious on credit, the strategy was overweight in the high quality segments which aided relative performance in the month. While looking for opportunities to add more duration, the Fund remained broadly in line with the benchmark as we await better pricing opportunities. In addition, we took the opportunity to add some credit protection.
Performance Commentary - March 31, 2023 The Janus Henderson Australian Fixed Interest Fund (Fund) returned 2.86% (net), 2.90% (gross). The Fund underperformed the Bloomberg AusBond Composite 0+ Yr Index (Benchmark) by -0.30% (net) in March, which returned by 3.16% on the month.
Bond yields fell dramatically, which contributed strongly to the performance of long duration positioned portfolios.
Spreads on semi-government bonds tracked wider versus Treasuries, contributing negatively to performance on a relative basis.
Credit spreads weakened over the month, which was a detractor to performance. Generous coupon income helped to preserve capital in what was a challenging month for physical credit. Floating rate credit outperformed fixed rate as investors shifted out of fixed rate bonds and into floating rate notes following the rally in bond yields. Fixed rate bank and corporate credit, including Tier 2 debt, underperformed government bond equivalents.
March was a strong month for performance, given the significant fall in bond yields. However, the Fund underperformed on a relative basis, opting for a neutral to slightly short duration versus the Benchmark. The Fund’s overweight to credit was also a detractor versus the Benchmark given the weakness in credit spreads.
The Fund has a strong yield advantage versus the Benchmark, which could contribute to relative outperformance in 2023.
Performance Commentary - February 28, 2023 The Janus Henderson Australian Fixed Interest Fund (Fund) returned -0.98% (net) and -0.94% (gross). The Fund outperformed the Bloomberg AusBond Composite 0+ Yr Index (Benchmark) by 0.34% (net) in February, which returned -1.32% on the month.
Bond yields rose over the month, unwinding half of the strong positive return gained in the month prior. The price fall on the short end of the yield curve outpaced longer-term bond moves as the curve re-adjusted to the Reserve Bank of Australia’s (RBA) hawkish stance, indicating more rate rises to come.
We have remained cautious on adding duration, as our outlook for further central bank tightening is broadly aligned with market pricing. Meanwhile, overweight duration to swap rates over government bond yields has been a positive contributor. Spreads on semi-government bonds tracked tighter versus treasuries, contributing positively to performance on a relative basis.
Globally, credit spreads weakened over the month, with Australia outperforming with local spreads 5 basis points (bps) tighter despite strong supply. Generous coupon income also helped buoy performance in the month. Floating rate credit outperformed fixed rate notes given the rise in bond yields. Active allocations to Tier 2 debt were a strong driver of returns as these assets significantly outperformed. We have favoured generating excess returns by having larger positions in high quality assets with greater liquidity, complemented with sub-sectors like Tier 2, where attractive value has been on offer.
February was a strong month for relative performance, with value added through active management in both rates and credit. The Fund preserved capital on a relative basis, opting for a neutral to slightly short duration versus the Benchmark. Selective rotation in subsectors of credit enhanced returns, especially the Fund’s weighting towards high quality investment grade credit in resilient, outperforming industries.
Looking forward, with much of the heavy lifting in rates behind us, and the market well-priced for more rate rises, the outlook for the asset class is revitalised. The higher yields with defensive characteristics repaired may very well come in handy as growth slows later in the year from restrictive policy. Further, the Fund has a strong yield advantage versus the Benchmark, which could contribute to relative outperformance in 2023.
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