JAAA Markets Itself as the Safest CLO ETF, But the AAA Label Hides a Tail Risk Most Buyers Never See Quick Read – Janus Henderson AAA CLO ETF (JAAA) offers a 5.51% distribution yield versus 3.7% for Treasury bills and money market funds, with $27B in assets, but investors…
nfuse the AAA credit rating with price stability when the rating only applies to losses within a specific CLO tranche structure. – AAA CLO tranches trade with significant liquidity risk despite zero defaults over two decades; March 2020 showed secondary prices fell 5-10% in days when dealers stopped bidding, creating mark-to-market losses that Treasury bills never inflict, and tax drag on ordinary income distributions further erodes the yield advantage in taxable accounts. – It sounds nuts, but SoFi is giving new active invest users up to $1,000 in stock for a limited time, and all it takes is a $50 deposit to get started. See for yourself (Sponsor) Money market funds and Treasury bills yield around 3.7% on the 3-month
The Janus Henderson AAA CLO ETF (NYSEARCA:JAAA) advertises a distribution yield of 5.51%. That spread, the three-letter AAA rating, and a trusted brand have pulled about $27 billion into JAAA. It is one of the largest active fixed income ETFs in existence.
But JAAA is not a money market fund. The AAA label describes credit risk on a specific tranche of a specific structure, and investors who hear AAA and think price stability are misreading what the rating conveys. SoFi Active Invest is offering a limited-time promotion.