Janus Henderson launches first European active ETF

Janus Henderson will today join the throng of asset managers launching actively managed exchange traded funds in the European market.

The move comes five months after the $360bn Anglo-American fund house bought London-based Tabula Investment Management in a push to expand its ETF franchise outside of the US.

The Janus Henderson Tabula Japan High Conviction Equity Ucits ETF (JCPN) is scheduled to be followed by a raft of follow-up launches as Janus Henderson responds to what it says is strong client demand.

“This is one of many products we are going to launch,” said Michael John Lytle, chief executive of Tabula, who said that in the coming 12 months “I would predict we would be close to 20 products, with a healthy bias of these in the active space.

“There is a move towards the ETF wrapper from a simplicity and transparency perspective for investors,” Lytle added. “We see ETFs as the more efficient way to get access [to markets]. We are super excited about this journey.”

While most ETFs have traditionally been passive index-tracking funds, actively managed ETFs have taken off in recent years and now account for about $1tn of the industry’s $14tn of assets under management, according to ETFGI, a consultancy.

Most of the growth has been in the US, but the European market is starting to take off, with active ETFs accounting for 8.4 per cent of net inflows to all ETFs in the third quarter, according to data from Morningstar Direct, well ahead of their 2.2 per cent share of assets.

Their total assets have topped $50bn for the first time, having doubled in the past 18 months.

Dutch asset manager Robeco launched its first active ETFs last week, while Cathie Wood’s Ark Invest, BNP Paribas Asset Management and American Century have unveiled their first active ETFs in Europe this year and BlackRock’s iShares issued its first active equity ETFs. Jupiter Asset Management and Eurizon Capital are among those poised to follow suit.

Overall, launches hit record highs of 12 in Q3 and 23 in the first nine months of the year, the Morningstar data shows.

“Active ETFs account for over 2 per cent of total European ETF assets currently, but there’s clear room for growth,” said Monika Calay, director of manager research at Morningstar. “With active ETFs capturing 7-8 per cent of all ETF flows over the past two quarters, they’re not just a footnote, they’re becoming a significant chapter in Europe’s investment story.”

Calay believed the growth of active ETFs in Europe was a reflection not just of investor appetite but also asset managers’ increasing willingness to navigate a “maze” of structural challenges, such as platform limitations in the UK and retrocession, or commission fee, models in continental Europe that favour more traditional active mutual funds.

“The launch of active ETFs by established players like Janus Henderson and Robeco signals a shifting landscape in European fund management,” Calay added. “These new entrants are attempting to thread a very fine needle. It’s not just about creating a compelling product, but also ensuring it fits into the complex ecosystem of platforms and distribution models across diverse markets.”

Janus Henderson already has a decade’s experience of running ETFs in the US, where it bought Velocity Shares in 2014. It is the fourth-largest provider of active fixed income ETFs in the US, where it has cornered the market for collateralised loan obligation funds, with the two largest vehicles. Overall, it manages a little over $20bn in 12 ETFs, and across its wider product range claims 60mn customers.

Tabula, which manages $1.7bn, runs a range of passive fixed income ETFs, as well as a gold exchange traded commodity, its largest vehicle.

As such, it may seem surprising that Janus Henderson’s first active European ETF is an equity fund, and Japanese equities at that.

Lytle said the nature of the debut launch was in part due to “a little bit of luck with the regulatory process”, with other ETFs still working their way through the system.

However, he added that Janus Henderson had managed Japanese equity mutual funds since 1980 and that Junichi Inoue, its head of Japanese equities who is adviser to the ETF, had 26 years’ experience as a manager in the asset class.

“He is passionate about what is going on in Japan now,” said Lytle, citing the governance reforms in the Japanese stock market ushered in by Shinzo Abe, the late prime minister, such as the unwinding of crossholdings, greater board independence and a sharper focus on distributing cash to investors, which have lured in more foreign investors.

“We have clients really demanding access to Japanese equities in this wrapper,” said Ignacio De La Maza, head of the Emea and LatAm client group at Janus Henderson. “This launch marks the beginning of our journey.”

JCPN will hold a concentrated portfolio of 20-30 stocks and come with a fee of 0.49 per cent, or 0.54 per cent for currency hedged versions. It will initially be listed on Frankfurt’s Xetra exchange, with further listings to come on the London Stock Exchange and Borsa Italiana.