In Your Face: Skandia Cans Janus on Two Accounts

Most individual investors have stood by the sagging (JAVTX)Janus Venture fund, but one pro just fired the fund's management team.

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On Tuesday American Skandia said it plans to replace Janus with rival growth-manager PBHG at the helm of its (JSCAX)ASAF Janus Small-Cap Growth mutual fund and AST Janus Small-Cap Growth subaccount for variable annuities. The move, effective in September, comes after a tough year in which Janus' small-cap growth team trailed virtually all its peers, according to Chicago fund tracker Morningstar.

Janus managers will continue to skipper seven other Skandia portfolios. But this dismissal should probably give shareholders of the Janus Venture fund pause, since it's their fund's managers, led by William Bales, who are being dismissed.

Closed to new investors since 1991, the $1.3 billion Venture fund has seen only light redemptions. But like many Janus funds, it rode tech stocks to heady gains in 1999 and has since taken big losses. The fund's 46% tumble over the past year nearly doubles its average peer's 24% fall.

In addition to "poor performance," the Skandia statement cited a recent management change as reasons for switching managers. Former co-manager Jonathan Coleman left the small-cap team to help run the firm's flagship (JANSX)Janus fund last December, but Bales stayed on; he has run the Venture fund since 1997.

Not Much Ventured, Not Much Gained
	YTD Return	1-Year Return	3-Year Return
(JAVTX)Janus Venture	-10.9%	-45.8%	6.4%
(JSCAX)ASAF Janus Small Cap Growth	-13.2	-46.9	4.0
Avg. Small-Cap Growth fund	-8.3	-24.0	8.0
Source: Morningstar. Returns through July 16.

James Smith and Jerome Heppelmann of PBHG will take over for Bales and his colleagues. Their (PSSCX)PBHG Strategic Small Company fund sports a 13.2% annualized gain over the past three years, compared with 6.4% for Venture.

"We understand that they were not happy with last year's performance, but we still believe in the merits of our small-cap team," says Janus spokeswoman Shelley Peterson.

That might not be so easy for Janus Venture shareholders, for whom the fund's tech-driven 141% gain in 1999 seems an increasingly rare highlight. The fund has trailed the Russell 2000 Growth Index and its average peer in seven of the past 10 years, according to Morningstar. The fund trails the small-cap growth category average over the past one, three, five and 10 years.

Despite those disappointing returns, redemptions from the fund haven't been steep enough to force Janus to open it to new investors. That said, the American Skandia fund's shareholders seem less patient. So far this year redemptions from the Skandia fund have outpaced investments by $112 million, compared with $59.1 million in outflows for the Venture fund, according to Boston fund consultancy Financial Research Corp.

Janus isn't the only growth manager to get the ax for losing 1999's gains over the past year. Last week RS Investments replaced Elijah Asset Management on two funds, and last month Vanguard dismissed Lincoln Capital Management after two bad years from the (VWUSX)Vanguard U.S. Growth fund.

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