Understanding Asset-Backed Securities (ABS)
For many investors, ABS can be an alternative to other debt instruments like investment-grade corporate bonds. While corporate bonds are an important component of a fixed income portfolio, the addition of ABS may help improve risk-adjusted returns due to their attractive yields, high credit quality, inherently low duration, and low correlation to equities.
What are Asset-backed securities?
Asset-Backed Securities have a large variety of consumer debt types, that have been securitised including auto loans, student loans, credit card receivables and unsecured personal loans.
This captures ‘real economy’ risk-return profiles that would respond differently to the various stages in the market cycle compared to corporate bonds.
Explore how you can access ABS through Janus Henderson
The value of an investment and the income from it may go down as well as up and you may lose the amount originally invested.
Why Janus Henderson for ABS?
Expertise and leadership: Our portfolio management team's nearly 60 years of combined experience, backed by a dedicated global team, stands as a testament to our success. This unparalleled expertise ensures we remain at the forefront of securitised investment management.
€51B
Firmwide securitised assets (as of 30/06/25)
Source: Janus Henderson Investors as of 30 June 2025.
Note: Firmwide assets include securitised products available outside of Europe and securitised portions of other fixed income strategies.
Dedicated securitised expertise
Portfolio Manager
Lead - Fixed Income Client Portfolio Management (EMEA) / Fixed Income ESG
Portfolio Manager
Key characteristics of ABS
1
Attractive relative value
ABS typically offers a better spread compared to other credit asset classes on a comparable ratings basis and has a shorter average spread duration.
2
Exposure to consumer lending
ABS provides exposure to a range of asset types and structures, within which there are different consumer-driven and ‘real economy’ risks that impact underlying collateral quality.
3
Strong credit ratings
Due to various credit-enhancement provisions within their structure, over 90% of the European ABS market is rated A or higher, with over 60% of the market carrying the coveted AAA rating.
European ABS has historically provided a lower default rate and an attractive Sharpe ratio relative to other credit asset classes.
4
Floating rate
Interest rate risk is typically negligible, which enables investors to enjoy credit spread-based excess returns while managing a portfolio’s interest rate strategy separately.
The importance of active management when investing in ABS
There is no one benchmark that is representative of the ABS investment universe. As such, we believe investors who want to invest in ABS should seek out experienced active managers with a proven track record of investing in securitised markets.
ABS cover a broad universe of sub-sectors that each have distinct fundamental and technical characteristics and that may perform differently through the market cycle. Therefore, investing in ABS requires specialist expertise and experience to analyse each asset’s investment case and determine how it might perform under varying economic scenarios.