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Janus Opens Doors to New Value Fund

Ian McDonald

Janus Strategic Value, a rare and intriguing foray into value investing from the $240 billion growth fund titan, starts a one-month subscription launch Monday.

Through Feb. 29, investors can reserve prelaunch shares at $10 a pop through Janus and leading online broker Charles Schwab(SCH Quote). On March 1, the fund will collect investors' pledged assets and put the money to work, employing an all-cap value strategy.

David Decker will manage the new Janus fund. Over the past three years, Decker's (JASSX Quote)Special Situations, a mid-cap growth fund, has posted a 40.3% average annual return, beating the average annual return of the S&P 500 index for that period by 18.4 percentage points.

Decker has told TSC he's ready and able to run a value fund, but time will tell if investors agree.

In subscription launches, which Schwab runs three or four times each year, the online broker is paid a fee to give a fund with no track record higher prominence than nearly 1,700 other funds on its OneSource fund supermarket and in emails to customers and advisers. Some financial planners and industry observers have said the deals could represent a conflict of interest for Schwab, long a proponent of a level playing field in fund sales.

Schwab denies any conflict of interest. But investors should also keep in mind that subscription fund launches -- which often replicate the urgency of the initial public offering of a stock, but not its returns -- might offer more benefits for fund companies than investors.

Subscription launches appear to be a hit with investors and fund companies. Schwab raised $177 million during a six-week subscription period for Hambrecht & Quist's IPO and Emerging Company fund. The subscription offer was so successful, the fund closed to new investors Dec. 30 just nine weeks after it launched.

Schwab is already offering Baron iOpportunity, one of many new Internet funds, in a subscription period that also ends Feb. 29.

A shaky stock market might make it tough to get investors excited about a value fund from a growth shop or yet another Internet fund. Schwab's marketing muscle could be put to the test.

Of course, that muscle shouldn't be underestimated. OneSource passed the $100 billion asset mark in January, a mark Schwab's own funds topped last year.