Janus, God of Growth and (Now) Value

The growth gurus at Janus will soon try their hand at another game: picking value stocks.

Janus Strategic Value, to be launched in January, will be the hard-charging growth shop's first value-oriented mutual fund. The fund will be managed by David Decker, who now runs Janus' (JASSX Quote)Special Situations fund.

Janus has been a no-brainer for growth investors. Over the last five years, the firm's flagship (JANSX Quote)Janus fund and the Janus (JAVLX Quote)Twenty fund ganged up on the S&P 500, took it out to the woodshed and gave it a whooping with annualized returns of 28.7% and 39.1%, respectively. The index returned an annualized 27.2% over that same period.

Growth investors look for companies that are expected to post larger earnings over the near term. Value investors try to flush out companies with healthy prospects that have been overlooked by Wall Street.

Last month, when Janus fund manager Jim Craig was promoted to director of research, TheStreet.com reported that the company was putting out some value feelers.

What does Janus know about value? Plenty, says spokeswoman Jane Ingalls.

"As much as the world likes to label what we do, what Janus is really all about is great stock picking," Ingalls says. While she can't talk specifically about the Strategic Value fund while it's in registration, she says Janus will approach value investing the same way it approaches growth.

"It's research that leads to great companies, so along those lines, value investing isn't anything different from what we've done here in the past," Ingalls says.

Decker, the new fund's manager, might be the closest thing to a value manager that Janus has. His current fund, Special Situations, is labeled a mid-cap blend fund by Morningstar, meaning it invests in both growth and value stocks. It's posting an impressive 37.1% return year to date, among the top third of all funds in its category. Decker is expected to continue managing Special Situations while running the Strategic Value fund.

According to the new fund's prospectus, Decker will have the freedom to invest globally and in stocks of any market capitalization. Of course, value investing is in the eye of the beholder. It's certainly hard to see Janus investing like value legend John Neff. Take, for instance, this one-liner from the fund's prospectus: "Many attractive investment opportunities may be smaller, start-up companies offering emerging products or services."

Still, Janus' move into value is well timed, says Burt Greenwald, a mutual fund consultant in Philadelphia.

"A lot of growth-oriented investors are wondering whether this market is going to run out of steam or if value is going to come back in style," Greenwald says. "Janus doesn't want to be a one-horse chaise."

It also wants to capitalize on its stellar investing reputation.

"This is a natural extension, and I think you'll see them do even more new product introductions over the next few years," Greenwald says. "They're going to take advantage of this halo effect they have as very, very savvy money mangers."

If other Janus funds are an indication, Strategic Value could grow fast. (JAGTX Quote) Global Technology and (JAGLX Quote) Global Life Sciences, both launched Jan. 1, have garnered $3.2 billion and $345 million, respectively, according to Morningstar.

"I think the sheer drawing power of the name will attract substantial assets," Greenwald says.

If the firm's namesake is any indication, it very well may be able to pull off a growth and value coup. Janus, after all, is a two-faced god.

Invesco Loads Up

Invesco is the latest no-load fund shop to open its arms to brokers.

Between now and February, Denver-based Invesco will make all 27 of its funds available to brokers by adding class-C shares, which have no load but pay the financial adviser a 1% annual fee, known as a 12b-1 fee, over the life of the investment.

As TSC reported on Nov. 6, several no-load firms, most recently Gabelli Asset Management (GBL Quote) and Kobrick Funds, have added share classes to reach out to brokers and financial planners.

As the do-it-yourself investing market matures, industry observers say this strategy is key to direct-sold fund firms' survival.

"I believe the direct distribution channel is tapped out at around 25% of sales. [No-load] firms have to find other ways to sell their funds," says Jim Folwell a consultant at Boston fund-researcher Cerulli Associates.

Most fee-only financial planners can already put clients into Invesco's funds through mutual fund supermarkets like Charles Schwab's (SCH Quote) OneSource, so the most significant effect of the new C shares is the funds' new access to traditional commission-based brokers.

Many brokers use class-C shares to compete with fee-only planners since they resemble a planner's pay structure, emphasizing annual fees determined by a client's assets, rather than up-front sales charges.

But investors should be wary of the shares' long-term costs, says Robert Mooring, a financial planner and former broker based in Miami. He and Folwell both say C shares' substantial annual fees can make them one of the more expensive ways for the long-term shareholder to invest.

-- Ian McDonald