Janus Henderson Investors has launched the Transformational Growth ETF, the first fundamental active equity ETF from the firm’s Denver-based Equities team.
The fund is managed by portfolio managers Nick Schommer, CFA, and Brian Recht.
It's an expansion of Janus Henderson’s Denver Equities team into managing ETFs, utilizing the team’s well-established, bottom-up fundamental research philosophy and process.
Janus Henderson said it has a long history of managing US equity growth portfolios, including its current U.S. concentrated growth strategy that dates back nearly forty years to 1985.
This new actively managed equity ETF seeks to pursue its investment objective by investing with conviction primarily in a
portfolio of approximately 20-30 equity securities. These securities will be selected for their growth potential, using an overall portfolio with characteristics tied to secular themes transforming society.
The themes of focus include: artificial intelligence, migration to the cloud, de-globalisation, digitisation of the economy (including e-commerce), healthcare innovation, or other long-term innovations.
The portfolio managers apply a bottom-up approach that focuses on fundamental research and considers a company’s sustainable competitive advantages, long-term growth potential, and shareholder value, among other factors.
Since 1957, the 10 largest stocks in the S&P 500 have underperformed an equal-weighted index of the remaining 490 stocks by 2.4% per year. But the last decade has been a very notable departure from that trend, with the largest 10 outperforming by a massive 4.9% per year on average.
Janus Henderson said it believes this domination of index returns by the largest stocks has created an opportunity for active management.
Schommer said: “We believe constructing a focused portfolio of high-quality, competitively advantaged businesses with
characteristics tied to the most important secular themes transforming society may lead to sustainable
relative outperformance over time.”
Recht said: “Given the extreme concentration in the market, we believe JXX’s fundamental, actively managed
approach seeks to provide thoughtful diversification away from the index and has the potential to yield
transformational growth."