FAQ
ETFs Explained
Exchange traded funds (ETFs) are investment funds that can be bought and sold in the same way you buy or sell a share on a securities exchange, such as the Australian Securities Exchange (ASX) or Cboe Australia (CXA). ETFs can generally be described as being passive or active.
Active ETFs offer a convenient way to combine the expertise of professional fund managers with the accessibility of trading ETFs on a securities exchange.
Many investors use Active ETFs because they provide a cost-effective way to access a professionally managed, diversified mix of investments and can fit in well with a variety of platforms and investment structures.
Passive ETFs aim to follow a benchmark or index as closely as possible and will go up and down in value in line with the index they are tracking.
Active ETFs have a professional investment manager making decisions about the underlying investment portfolio, and actively aim to outperform the market or index.
Active ETFs offer a convenient way to combine the expertise of professional fund managers with the accessibility of trading ETFs on a securities exchange.
The Australian Securities Exchange (ASX) is a securities and derivatives exchange which was created by the merger of the Australian Stock Exchange and the Sydney Futures Exchange in July 2006. It provides an integrated exchange offering for Australia’s listed companies, derivatives, exchange traded investment products and debt securities. The ASX is one of the world’s top-10 listed exchange groups measured by market capitalisation.
Active ETFs are a type of exchange traded fund that have a professional fund manager making decisions about the underlying investment portfolio, and actively aim to outperform the market or index. Active ETFs offer a convenient way to combine the expertise of professional fund managers with the accessibility of trading ETFs on a securities exchange.
Cboe Australia (CXA) is a securities and derivatives exchange and an alternative to the Australian Securities Exchange (ASX). It offers investors access to a range of exchange quoted equities, funds, warrants and market and data indices. For investors, the process of accessing an investment via Cboe is the same as transacting on the ASX and there are no additional access requirements.
Active ETFs can offer investors access to a diversified portfolio of investments, combined with having greater convenience and transparency of their investments. Some of the key benefits of Active ETFs include:
- Convenience: Active ETFs are traded on securities exchanges, which means you can buy and sell Active ETF units via your broker or your online trading account, just like you would do if you were buying and selling shares.
- Diversification: Active ETFs help diversify an investor’s portfolio across markets or asset classes that can be difficult to access.
- Transparency: The security holdings of the Active ETF are typically published on the issuer website. This not only means you can review the securities held by your Active ETF, but also it means the market can accurately price the ETF throughout the day.
- Income: All income received by the fund through the year is fully paid to unitholders, subject to the Active ETF having sufficient distributable income after taking into account any expenses charged to the Fund. It is generally paid monthly, quarterly, or semi-annually. In most cases, investors are able to elect to receive this income in the form of additional units via a Distribution Reinvestment Plan (DRP) or as cash.
- Fair value for investors: Active ETFs are designed to trade at a price that is close to their underlying net asset value (NAV). This means that the price you pay should closely reflect the underlying assets of the fund.
ETFs can be bought or sold on a securities exchange by any investor with a brokerage account, just like buying or selling shares.
All investments carry risk that the value of your investment could go up or down. Some key risks of investing in Active ETFs include:
- Market risk: The securities that the Active ETF owns may go up or may go down.
- Active management risk: The performance of the Active ETF may deviate significantly from the performance of the benchmark due to an active management approach.
- Interest rate risk: For fixed income Active ETFs, securities can decline in value because of changes in interest rates.
- Company specific risk: For equity Active ETFs, investments in a company can be subject to the risks to which that company is itself exposed to that may impact the value of the company.
- Liquidity risk: It may not be possible to sell the underlying securities of the Active ETF when it is desirable to do so or to realise what the Manager perceives to be their fair value in the event of a sale
Always refer to the Product Disclosure Statement for more details on risks before investing.
ETFs typically charge a management fee which is associated with the ongoing costs of managing your investment. Management fees (and any other costs) vary between ETFs and is set out in more detail in the ETF's Product Disclosure Statement.
As ETFs are bought and sold like shares, brokerage fees will apply. These fees are set by your broker and therefore may vary.
The key differences between Active ETF’s and managed funds are their accessibility and minimum investment amounts.
Active ETFs operate in a similar way to managed funds, in that they are professionally managed by an investment manager, who makes active decisions about what to invest in. The investment objective of an Active ETF’s and an unlisted fund are the same and both share classes are exposed to the changes in value of the securities held in the fund.
However, unlike managed funds, Active ETF’s do not usually require lengthy application forms. Units in an Active ETF are available to be bought or sold through a broker or online trading account in the same way shares are traded.
Active ETFs are priced throughout the trading day and investors can trade at real time prices. Active ETFs are settled on a two-day basis, and the settlement (exchange of cash for ETF units) happens through your trading account and CHESS.
There is usually a minimum investment amount for managed funds, however there is no minimum amount when investing in an Active ETF.
Janus Henderson Active ETFs
Janus Henderson offers the following Active ETFs for investors in Australia:
- Janus Henderson Global Sustainable Equity Active ETF (Ticker ASX:FUTR)
- Janus Henderson Net Zero Transition Resources Active ETF (Ticker ASX:JZRO).
- Janus Henderson Sustainable Credit Active ETF (Ticker ASX:GOOD).
- Janus Henderson Tactical Income Active ETF (Ticker CXA:TACT).
If you are an investor in our ETFs and have questions about your holdings or need to change your details, please contact the registry, Computershare.
General queries:
E: web.queries@computershare.com.au
T 1300 140 313
T +61 3 9415 4292 (Outside Australia)
Janus Henderson Active ETFs can be bought and sold in the same way you buy or sell a share. There are two main ways you can invest:
- Via your broker or licenced financial adviser, or
- Directly via your online trading account, simply by searching for the ticker of the Active ETF you would like to invest in (e.g FUTR, GOOD, JZRO or TACT).
The details of your investment in a Janus Henderson Active ETF are held by Computershare, the share registry. They are not held by Janus Henderson. To change your banking details, to provide your Tax File Number (TFN), to make a DRP election, or to change your mailing address, please contact Computershare.
General queries:
E: web.queries@computershare.com.au
T 1300 140 313
T +61 3 9415 4292 (Outside Australia)
Just like any share you may have invested in, after the end of a financial year you will receive personal tax statement regarding your investment in the Active ETF, setting out the components of any income received during that financial year. This can be used to help you with your tax returns for the year.
Most investors view their holdings and ETF valuations via their broker, online broking account or financial adviser.
Dividends, Distribution & Pricing
Most Active ETFs will pay a monthly, quarterly or semi-annual distribution and offer a Distribution Reinvestment Plan (DRP) which allows investors to reinvest their income and continually grow their investment. Please check the Product Disclosure Statement to confirm distribution frequency.
Note: Distributions are not guaranteed and there may be periods in which no distributions are made.
The iNAV (Indicative Net Asset Value) is independently calculated and published to the product page every 15 seconds to provide a real time indication of the current market value of the assets of the ETF.
A Distribution Reinvestment Plan (DRP) is a scheme that allows investors to elect to receive distributions in the form of new units, instead of receiving it as a cash payment.
Investors in a Janus Henderson Active ETF can sign up for the DRP by contacting the ETF share registry, Computershare.
Although the NAV reflects the value of the ETFs underlying assets less fees, costs and other liabilities, the market price of an ETF is determined by the price at which ETF units are bought and sold throughout the course of a day.
NAV stands for “net asset value” and reflects the dollar value of the ETFs underlying assets, less any fees, expenses and other liabilities. The NAV is calculated daily and can be used to reflect the value of the ETF’s underlying assets at the end of that trading day.
Get in contact
If you are an investor in our ETFs, have questions about your holdings or need to change your details, get in touch with the registry, Computershare, here.