JBBB, JAAA & T-Bills: What's Better? Safer?

JBBB is paying 6.21% with monthly cash payouts at the time of this taping, significantly higher than T-Bills at the moment. Is JBBB safe enough for you? Or might JAAA or the T-Bills be better or safer?

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J TripleB is paying 6.21% with monthly cash payouts, even as rates have moved lower on the short end. Is JTAB safe enough for you, or might JAA be the better choice? Hello, Diamond Estic Member Super Savers and Course fans, I hope you're healthy and well. So it seems that some of the regulars on our channel often sit on a fair bit of dry powder in their portfolios, and even more so during uncertain times like these, which is completely understandable by the way. That said, those of us holding onto excess cash while we wait for the right investment opportunities to come along, we also want to earn as much as we safely and reasonably can on that money. So it's no wonder that there is renewed interest in JAA and J T B in our Diamond Nestate community. JAA is the Janice Henderson AAA CLO ETF, and J T B is the Janice Henderson B to Triple B CLO ETF. In fact, I know that a number of our VIP investment club members already own one of them as part of their more short-term portfolios. Some even own both. Both JAA and JTCAB are liquid and show a relatively high cash distribution yield. JAA's 30-day SEC yield stands at 4.8% and JTAB's at 6.21% at the time of this taping on April 24th, 2026, versus short-term T-bills, which are yielding around 3.7% or less, depending on their maturity. The secret sauce, so to speak, to the higher yields behind JAA and JCCB versus T-bills is that JAA and JCAB are not simple straightforward bonds, but rather ETFs that hold collateralized loan obligations, or CLOs. CLOs are complex and not for everyone. As our diamond nestagers know, no risk, no return. So with that in mind, here are the three topics I'll be covering today. One, how do JAA and J Triple B generate their cash distribution yield? Two, how did JAA versus J Triple B perform in comparison over the past three years? And three, what's our personal opinion on JAA versus J Triple B? Let's dive in now folks. How do JAA and J Triple B generate their cash distribution yield? So as I just mentioned, JAA is the Janice Henderson AAA CLO ETF, and JTAB is the Janus Henderson B to Triple B CLO ETF. As their names already suggest, JAA and J Triple B have different credit qualities, different ratings in their portfolios, but both generate their distributions fundamentally in the same way. Here are the five similarities between JAA and JCAAB. 1. Both JAA and J TAAB hold tranches of collateralized loan obligations, or CLOs. For those of you who missed it or need a refresher, we've linked some of our earlier introductory videos on JAA and JCAAB below this video for you. VIP Investment Club members. All our JAA and JBAB videos, including the members only ones that compare them against other CLO ETFs in the market, can be found here on the left-hand side in our member zone. In a nutshell though, CLOs take a portfolio of non-investment grade corporate loans, junk bonds, and structure the payments in a way that creates different slices, different tranches with a specific risk rating from AAA down to B and lower. Marcus and I like to compare CLOs to the Hoover Dam on the Colorado River. The Hoover Dam has a large catchment area, but one where water is not abundant. That's the portfolio of a CLO. So if we follow this train of thought for all practical purposes, there will be some rain somewhere every year. The dam collects all the rain that falls into one large reservoir and then distributes it according to the priority of the water rights that certain users have. Again, that's like the CLO, which collects all incoming payments and then pays them out in order of priority with the triple A tranche coming on the very top, meaning basically that the triple A tranche always gets paid first. So back to our dam comparison. If there was ever a very dry year, the dam would still have some extra water to get through the drought, and this would go to the highest ranked users first, which by the way, in the case of the Hoover Dam, doesn't seem to be the nearby city of Las Vegas, as one would assume. But I digress. So a CLO is similar. Even in a very bad year, there will be some incoming payments that can go to the AAA tranches first, sometimes from interest payments, sometimes from principal payments, and in the worst case, sometimes from selling the underlying collateral of a company that defaults. Similarity number two. The corporate loans underlying both ETFs are floating rate, which means they will fluctuate over time. Neither JAA nor J Triple B can lock in a current rate like a long-term treasury, agency, and some types of annuities can. CLO interest payments are based on an underlying benchmark that follows the Fed funds rate closely, usually the three-month term SOFRA, the three-month overnight secured financing rate, but with an added risk premium, an extra spread on top. This extra risk premium on top will be lower for the highly rated JAA and higher for the lower rated J Triple B. Similarity number three. The price of both JAA and J Triple B tends to be more stable than for funds that hold normal fixed coupon bonds because the interest rates on CLOs are floating and adjust with the market. This means that their prices don't need to move that much. That said, everything is relative, and we'll talk more about the relative stability of JAA versus J T B in the next section of today's discussion. Similarity number four, both JAA and JAAB are listed on an exchange. JAA on the New York Stock Exchange and J Triple B on the CBOE in Chicago, and they can be bought or sold quite easily in most brokerage accounts. And five, both JAA and J Triple B pay monthly dividends. The income is fully taxable at ordinary income tax rates when held in a taxable brokerage account, just like for most bond types that are not treasuries. So these are the five similarities between JAA and J TAAB, the first three of which explain their higher distribution yields over T-bills, which for all practical purposes carry no credit risk. So let's move on now to the next section of today's discussion. How did JAA versus J TAAB perform in comparison over the past three years? Let's look at the historical track record of JAA and JAAB over the past three years and talk about how JAA and J Triple B are different. Three years is essentially the length of time that both of them have been on the market together, although JAA is a bit older than J Triple B and was already launched in October 2020. So difference number one, and probably the biggest one in our mind from a quantitative standpoint is cash distributions. JBB is ahead here at the time of this taping, on April 24th, 2026. Whether you take its 30-day SEC yield of 6.21% or its even higher Morningstar TTM distribution yield of 7.93%. JAAA's cash distributions were lower by both measurements. Its 30-day SEC yield stood at 4.8% and its Morningstar TTM yield at 5.62%. Both the 30-day SEC yield and the TTM distribution yield measure how much in cash an ETF distributes to its shareholders based on the latest share price. The key difference is that the 30-day SEC yield takes the distributions over the last 30 days and annualizes the results, multiplying it by 12 basically, while the trailing 12-month yield uses what the fund actually paid out over the past 12 months. However, we can also see that the difference between the two funds has been shrinking over the past year, while JTRCB's cash distribution yield was 2.31 percentage points higher than JAAA's when we look at the trailing 12-month yield. This advantage shrank to 1.41% for the last 30 days under the SEC methodology. And you can see this narrowing distance on this chart here. The red line shows the monthly cash distributions from J Triple B in dollars per share, and the blue line shows the monthly cash distributions from JAA in dollars per share. You can see that back in 2023, for example, J Triple B paid much more per share in one month. JBB also had generally higher monthly distributions overall, although there were two months where JTAB paid the same or even less than JAA. Over the past six months or so though, the difference does appear to be shrinking a bit. And for those of you who might be wondering, the latest share price at the time of this taping on April 24th, 2026 was$50.65 for JAA and$47.43 for J Triple B. So reasonably close. Share prices fluctuate all the time though, bringing us nicely to difference number two between JAA and JBB, share price volatility and total returns. As we mentioned earlier, CLO ETFs are often seen to have more or less stable share prices compared to treasuries or any other long-term bonds with a fixed coupon. The rates adjust, so the price doesn't need to move as much. However, both JAA and JB have historically still seen their share prices fluctuate a bit. On this chart, the blue line is the share price of JAA over the past three years, up until the time of this taping on April 24th, 2026. If you ignore the overall seesaw pattern that comes from the monthly cycle of accruing and then paying out the dividend, you could say that JAA's share price has been more or less gently sloping upwards and is now trading 1.7% higher than three years ago. There are some dips, like here in April 2025, pretty much around the time when President Trump announced his Liberation Day tariffs, and here, earlier this year, when the war in Iran started. But these were relatively short-lived and shallow, with the biggest fall in April 2025 being around 2%. In contrast, the yellow line for JB is much more volatile, even at first glance, with some pronounced upswings and downswings. For example, after reaching a high in early 2025, it fell sharply not long after that, by about 6% around the Liberation Day tariff announcements. And there was another drop of more than 2% earlier this year when the Iran war began. The difference in volatility that we've just shown you ultimately comes from the fact that the market sees JAA as essentially free of credit risk, but assigned some residual risk to JBB, as we touched upon previously. There are also some technical considerations at work here, but we'll leave these for another time and move on to trailing total returns now. Trailing total returns show the past performance of an investment by adding up gains and or losses from both cash distributions and share price movements, and then annualizing them. So the three-year total trailing return, for example, tells us how much an investor would have made on an annualized basis from both dividends and capital gains, share price gains, had he or she invested three years ago. And what we can see here is that in the last year or so, JAA would actually have generated more in total return than JTB. This 1.25% here for JAA year to date versus only 0.25% here for J Triple B. And this 5.76% here for JAA over the past year versus 5.46% here for JTAB. And if this comes as a surprise because JTAB paid higher dividends over the past 12 months than JAA, remember that this underperformance was essentially driven by share price falling. In the slightly longer run though, the higher risk from J Triple B would have been rewarded with a higher total return. Over the past three years, the trailing total return was 6.73% for JAA versus 9.59% for JCCB, so about 2.86% higher for JCB. And that's what we would expect. J Triple B with its higher risk profile might experience more volatility, but should generate a higher total return over the longer run. Difference number three between JAA and JBB ratings. As we've discussed in previous videos, JAA holds basically 100% of its portfolio in AAA rated tranches, which makes it very safe. JTACB, on the other hand, takes on higher risk to generate its higher returns. At least 85% of JBB's holdings are rated Triple B, which is investment grade, although at the lower end of the range. In addition, it is allowed to hold up to 15% of double B and B rated tranches, which are non-investment grade. Now, at the time of this taping, JTB holds 93.83% of its investments in triple B, meaning that for all practical purposes, it has an overall investment grade risk profile. But as I just said, they could go up to the 15% limit for non-investment grade tranches down to single B if they felt it was the right thing to do in a specific market. Difference number four between JAA and JBB, historical credit losses. Moody's published a study that looked at about 20,000 CLO tranches that were issued between 1993 and 2022, a period that included economic downturns such as the internet bubble of 2000 and the great financial crisis of 2008-2009, and counted the total number of tranches that were impaired, had a technical default during this time. The study found not a single impairment or default for AAA tranches, basically confirming that funds like JAA have a track record that is essentially credit risk-free. With J Triple B, it's a bit different. You should assume that you carry some credit risk when you buy it. For tranches issued with a BAA rating, which is comparable to a triple B rating by SP, Moody's found 26 impairments out of 3,119 tranches, a rate of 0.8% in total over 30 years. As a reminder, Triple B is still investment grade and makes up at least 85% of JBB, and currently even 98%. For tranches rated BA by Moody's, the equivalent of single B for SP, the historical impairment rates are higher. Moody's found 51 impairments out of 2,742 tranches, a rate of 1.86% over 30 years. This is not to say that potential impairments in the future will look like this picture here. But seen in the rearview mirror, these impairment rates are probably not large enough to have put your principal at risk if you had invested into something like JTAB back in 1993. Which brings us to the next point. Difference number five between JAA and JAAB, volume. With$1.1 billion in total assets, J Triple B is a fraction of the size of JAA with its$27 billion, which may impact liquidity for larger orders and or in times of market stress. So, where does this leave us then, right? Well, let's move on to the next part of today's discussion and find out. What's our personal opinion on JAA versus J Triple B? As we always say, everyone's financial journey is different. And as we've repeated often to our VIP investment club members, CLOs are not for everyone. Yes, some of our members hold either JAA or JBB, and some even both, as I mentioned towards the beginning of this video. But other members prefer to park their dry powder in money market funds and T-bills. And if you'd like to come join the daily conversations in our private VIP investment club to see what others like yourself are doing right now to protect and grow their nest egg, remember that our April member live is happening today, Sunday, April 26th at 5 p.m. Eastern Time, 2 p.m. Pacific Time. Visit our website at www.diamondnesteg.com and click on this yellow Private VIP Investment Club button to learn more and become a part of our growing VIP member community of Nest Eggers. I've also linked everything below for your convenience. The way we see it, it never hurts to have a reputable second or third pair of eyes and ears to bounce ideas off of. Because CLOs and most higher yielding investment products these days are not straightforward, and it's rarely ever a wise decision to buy something that you don't understand or that makes you lose sleep at night. It's just not worth it in my mind, even for a few potential extra points of yield. But if you're comfortable with CLOs and their structure in principle and are debating between the safer JAA and the higher yielding JB, here's how we think about this. I personally can see a case where an investor would find higher yielding CLO ETFs attractive. If you can stomach the higher risk and volatility and have a longer time horizon, JTCB's track record shows that you might have earned some competitive cash distribution yields and long-term trailing total returns for what we think is still a relatively limited increase in its risk profile. That said, if you buy JBB, you need to be prepared for some volatility along the way, as we've seen before. JBB behaves more like a bond ETF than a cash alternative in our mind. If, on the other hand, you're looking for safe and stable investment that you may want to hold even for a shorter period only, JAA might be something to look at. In fact, the market often attaches labels such as cash alternative, near cash, or cash plus to JAA, indicating that it's not quite cash, but highly liquid and reasonably stable while still offering a bit of a yield premium over savings accounts and short-term treasuries. So if you like JAA because of its more conservative risk profile, large asset base, and liquidity, I would not necessarily switch everything into J Triple B. Remember though, you can always mix and match. Find a split that fits your personal risk profile. For example, 60 to 70% of JAA and 30 to 40% JAAB within your portfolio allocation for CLO ETFs or whatever your personal comfort level is. And as always, remember that past performance is not indicative of future results or outcomes. So these historical numbers that we've shared with you today may change over time. In other words, while the cash distribution yields on both JAA and JBB are attractive at the moment, future dividends will fluctuate with the benchmark rate, even in a no default scenario. As with nearly all ETFs, you cannot lock in rates like you can with treasuries, other non-callable long-term bonds with a fixed coupon, and certain types of annuities that we discuss often on this channel. So, how do you feel about JAA versus J Triple B? Which one would you buy now that we've gone through the similarities and differences between the two? Or do you own some already like some of our VIP investment club members? Drop a comment below and let me, Marcus, and everyone else in our community know. And as usual, I'd love to invite you to come join our VIP Investment Club to continue learning about the best rates, investment opportunities, and what others like yourself in our growing member community are doing right now for safety and inflation protection as well as for higher yielding growth. Visit our website at www.diamondnestec.com and click on this yellow private VIP Investment Club button to learn more. I've also linked everything below this video for your convenience. Alright, Diamond Nestec members, Super Savers, and Course fans, I hope you enjoyed today's video and learned something new. And see again very soon, either later on in our member live or next week on YouTube with more brand new wealth building content for your financial journey.