Fund selectors react to Janus Henderson's Tabula acquisition

‘Janus Henderson is already one of the biggest fixed income ETF issuers in the US’

Jamie Gordon

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Janus Henderson’s acquisition of fixed income specialist Tabula Investment Management could spark a roll-out of actively managed bond ETFs in Europe, fund selectors have told ETF Stream.

With the tie-up expected to be completed by the end of Q2, Janus Henderson is set to launch a suite of active ETFs alongside Tabula’s 10 existing fixed income ETFs.

The $385bn asset manager plans to use the UCITS ETF structure to tap its existing European client base alongside demand in Latin America and Asia, having amassed $15.9bn assets under management (AUM) across 11 US-listed ETFs.

Active fixed income in the crosshairs

While fund selectors identified Tabula as an ideal acquisition target for potential European entrants – given its modest $877m AUM and experienced staff, such as CEO Michael John Lytle, formerly chief development officer at Source – they noted Janus Henderson may look to capitalise on the firm’s fixed income expertise.

Janus Henderson also has experience within the space, operating six actively managed bond ETFs in the US spanning credit, mortgage-backed securities, the securitised market and collateralised loan obligations.

“The acquisition of Tabula by Janus Henderson appears to make good sense from a strategic perspective,” Dan Caps, investment manager at Evelyn Partners, said.

“Janus Henderson is already one of the biggest fixed income ETF issuers in the US and acquiring Tabula with its fixed income focus will allow it to seamlessly expand into the European markets and beyond.”

Echoing his views, Goncalo Machado, investment manager at InvestEngine, added Janus Henderson could be primed to address the shortage of nimble fixed income strategies in Europe.

“Active bond ETFs have more room to grow rather than just more ‘exotic’ equity products,” he said. “With the way most fixed income ETFs have been built so far, there is scope for a huge amount of innovation given the current credit environments.”

Allan Lane, CEO of Algo-Chain, argued the acquisition makes “a lot of sense on paper” given Janus can exploit gaps in Tabula’s fixed income range.

“Developing and launching fixed income ETFs needs more infrastructure than most firms can offer and for this reason alone, Tabula’s platform gives Janus Henderson an advantage as they look to build out an ETF base in Europe,” Lane continued.

“What they must do though, is offer a lot more online tools so fund selectors can more readily access the appropriate bond analytics to help make the exercise of portfolio construction less guesswork than it currently is today.”

A springboard to UCITS ETFs

Zooming out, the acquisition of Tabula and its platform will also enable Janus Henderson to go head-to-head with other established asset managers in UCITS ETFs more broadly.

“The move is interesting. It looks like Janus Henderson is trying to launch an attack on BlackRock,” Alex Brandredth, CIO at Luna Investment Management, said.

“Tabula mainly has a lot of specialist products, therefore over the coming years I can see Janus rolling out a lot of the more traditional ETF products, now that they have the platform to be able to do that.”

Peter Sleep, former senior investment manager at 7IM, argued Tabula's team is used to dealing with complex strategies and would not struggle to sell Janus Henderson's active products within an ETF wrapper.

"Janus Henderson management, when faced with a choice of build from the ground up, using their existing London infrastructure, or buy, probably made the right choice to buy – I say this without knowing the price paid.

"The purchase of Tabula gets them a European platform quickly without the difficulty of asking their existing staff to sell traditional funds and learning to sell ETFs, which I believe to be a different skill set," he said.

Caps added his team covers some Janus Henderson mutual fund strategies and will watch the launch of equivalent ETFs as a gauge for active ETF demand outside of the US.

He also pointed to the firm’s £3bn outflows in Q1 and noted a trend of active fund managers turning to active ETFs to “help stem the bleeding”.

“Given most ETFs are passive, I am not convinced the move is not more driven by style over structure, but we will learn more as the active ETF market becomes more established,” he concluded.

More asset managers to come

The mutual fund and investment trust specialist’s arrival in UCITS ETFs makes them just the latest to test the waters of European active ETF demand – and likely not the last.

“My initial thought is that they seem to be the last ones to the party,” Paul Dennis, investment director at Holden and Partners, said.

“It is not all that surprising when so many of the others have done this as well. Having both active and passive seems to be the carbon copy for many asset management businesses now.”

Janus Henderson’s entry to Europe’s ETF market comes within a fortnight of Cathie Wood’s ARK ETF debuting a maiden trio of active ETFs in UCITS format.

The new arrivals join a European active ETF market currently dominated by one issuer – JP Morgan Asset Management – which has amassed a 44% market share since entering in 2018.

However, the firm’s global head of ETFs, Bryon Lake, was poached by Goldman Sachs Asset Management last week. GSAM currently offers a range of 10 actively managed sector, theme and premium income ETFs in the US and could be among future contenders to enter the fray in Europe.


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