| NEW YORK
NEW YORK Feb 5 As he begins his fourth year
trying to turn around Janus Capital Group, Chief
Executive Richard Weil is overseeing the launch of a new fund
aimed at filling a gap in its lineup, the latest effort to stem
outflows at the Denver asset manager.
Janus Diversified Alternatives Fund joins the
competitive "absolute return" category but offers a twist in how
it allocates investments.
The fund is the eighteenth new investment strategy that
Janus has launched since Weil took over in early 2010 and comes
as Janus contends with several years of underperformance. But
returns improved last year and Weil is looking to expand Janus'
narrow product base to attract investors.
High on the list are funds to protect investors from wild
market swings, Weil said in an interview in New York on Tuesday.
Currently, Weil said, the approach used by many investors to
balance risk "is failing in its mission to be sufficiently
Diversified Alternatives Fund instead tries to rethink how
investors treat risk. Armed with data showing that many
diversified portfolios hold assets highly correlated to equities
- thus exposing investors to the same risks even if those risks
come via diverse asset classes - the Janus strategy allocates
instead with an eye on how risks intersect.
Holding stock in a computer maker, for instance, also means
taking on risks inherent in commodities prices or currencies,
said Richard Lindsey, chief investment strategist for
alternatives. He is working on the effort with Andrew Weisman,
chief investment officer for the area.
They would not say how they build the strategy around
specific stocks. The fund's largest equity holding on Dec. 31
was Colgate-Palmolive Co at just 0.25 percent of the
fund's total value of roughly $27 million. Cash and equivalents
made up 94 percent of holdings, a result of its heavy use of
vehicles like futures contracts.
Other absolute return funds - which generally seek
consistent returns - also use a wide mix of tactics like
short-selling, futures contracts and inflation-protected bonds.
Though the funds generally carry higher fees, they have
become one of the hottest categories tracked by Lipper, a unit
of Thomson Reuters, and took in $6.8 billion in new money last
year from investors.
Weil concedes that the Janus brand of absolute return
investing could require some education for individual investors.
It also is not meant as a savior for the storied firm, from
which investors withdrew $12 billion in 2012.
Some investors hope Janus will recover as investors move
back into equities. Just in January, investors added $20.7
billion to equity funds, according to Lipper, the most of any
month since January 2011. But the start of the year often brings
money into equities as investors rebalance and there is much
ground to make up. Investors pulled $129.2 billion from equity
funds in 2012. Janus has not reported its flows for January.
Also not clear is whether a grand shift to equities would
reverse Janus' outflows. An analysis by Thomson Reuters' Lipper
unit shows handicaps for the company: Some of its biggest funds
are out of favor. Its namesake Janus Fund now has about $8
billion of assets, down from $50.9 billion in August 2000.
Janus also lacks products in two of the five best-selling
fund categories, equity income and international multi-cap core
funds. It has very small funds in the others, including emerging
markets, global flexible and absolute return.
"To the extent that recent investor preferences persist, it
will be hard for Janus to regain lost assets," said Lipper
analyst Jeff Tjornehoj.
LOOKING FOR A SOLUTION
Janus stock has been stuck below $10 since 2011, but not for
lack of trying by Weil, previously an executive at PIMCO. His
other efforts include putting more resources into selling and
running Janus' bond funds, which now account for 17 percent of
Janus' total assets under management of $156.8 billion, up 4
percent from the end of 2009.
Weil also struck a deal in August with Dai-ichi Life
, Japan's largest listed life insurer, in which it
agreed to buy up to 20 percent of Janus shares and distribute
Janus products to Japanese investors.
Until Janus begins to report inflows many investors remain
wary. "Given their performance, there's a big question mark in
terms of whether people come back" to Janus funds, said an
analyst for one investor, speaking on condition of anonymity
because the comments were not authorized.
Janus still has its backers however. Chicago-based Ariel
Investments was its second-largest holder as of last fall, and
portfolio manager John Miller said that Janus stock was Ariel's
most controversial holding. Still, Miller said he had confidence
the big Janus funds will attract investors again.
"We do believe that investors will return to the equity
market, and there's no reason why Janus will not be a
beneficiary," he said.