Value Fund Proves a Savior For Growth-Happy Janus

Janus' tech-heavy funds have taken some lumps in the Nasdaq Composite Index's recent selloff, but it seems investors are standing by their go-go growth-fund managers. The Denver-based firm continues to attract more investment dollars than any other mutual fund outfit.

But in an odd twist, Janus' saving grace nowadays might be its new value fund, (JSVAX)Strategic Value, about which investors know virtually nothing.

The fund is up 10.9% since its March 1 launch, comfortably beating most stock funds and its average value peer, according to Morningstar. While it's clear portfolio manager David Decker has made some good moves, it's not at all clear what those moves are. Because Janus closely guards its portfolio information, no one aside from insiders has any idea what Decker is doing with the fund's $2.4 billion in assets.

While TSC has made some educated guesses, the fund's holdings won't be available until its first shareholder report comes out in mid-June. Decker has understandably shied away from interviews as he put his mountain of money to work. (A Janus phone rep said the fund's cash position was just 3.2% on Thursday.)

The fund's mystery hasn't scared off investors. In a four-week subscription period prior to launch, they dumped more than $1 billion into Decker's lap, demonstrating how gaga investors were for all things Janus.

Launching a value fund in the midst of one of the hottest growth markets ever was seen as a prudent hedge against a tech selloff. Now it looks brilliant.

Strategic Value's launch, which coincided with the liquidation of several other value funds, looks incredibly prescient from an investment standpoint, but also from a marketing point of view.

The fund helped keep Janus' sales ahead of the pack in 2000, according to the latest figures from Boston fund consultant Financial Research. From Jan. 1 through March 31, Janus has taken in more than $28 billion. That's about 40 cents of every dollar invested in all funds and four times more than broker-sold Putnam, the No. 2 best-selling fund family. Over the same period fund titans Fidelity and Vanguard have only taken in $2.6 and $1.6 billion, respectively.

Strategic Value was the No. 1-selling fund in March, though the $2.4 billion total is somewhat inflated due to a technicality. All of the money it raised during its February subscription period was counted as part of the March figures, since that's when the fund launched. The second best-seller was (JAWWX)Janus Worldwide with a March inflow of $1.8 billion.

These impressive inflows keep coming, despite the fact that 14 of the firm's 15 equity funds are underwater for the year, some down as much as 30% to 40%.

Which of These Things Is Not Like the Others While Janus' tech-heavy funds suffer, freshly-minted Strategic Value is weathering the market's storm.
Janus Fund	Return Since March 10	1-Year Return
(JAVTX)Venture	-44.5%	51.2%
(JAGLX)Global Life Sciences	-35.6	62.4
(JAENX)Enterprise	-32.1	64.4
(JAGTX)Global Technology	-26.7	130.6
(JAOLX)Olympus	-22.4	60.3
(JAOSX)Overseas	-20.6	76.3
(JAMRX)Mercury	-15.3	52.6
(JAWWX)Worldwide	-13	54.6
(JAVLX)Twenty	-8.4	31
(JAGIX)Growth and Income	-6.6	34.3
(JAEIX)Equity Income	-4.8	18.4
(JABAX)Balanced	-4	11.8
(JASSX)Special Situations	-3.1	37.7
(JANSX)Janus	-2.6	35.8
(JSVAX)Strategic Value	11.1	N/A
S&P 500	5	8.4
Nasdaq Composite	-25.2	48
Source: Lipper. Performance figures through April 27.

What train hit these funds? Janus managers tend to share ideas, so many funds often bet on a similar basket of large-cap growth stocks. That somewhat concentrated approach led to an average return of more than 80% last year, but since the Nasdaq peak it has aged about as well as Elvis.

According to BigDough.com, a Web site that tracks institutional stock ownership, eight of the firm's top-10 holdings at year-end were in tech, media and telecom, a combo popularly know as TMT. The firm's favorites included troubled techs like Microsoft (MSFT) and Texas Instruments(TXN), down 30.9% and 11.8%, respectively, since the Nasdaq party quieted down on March 10.

That hasn't deterred Janus fans, at least not yet. Industrywide, inflows for April indicate investors still favor aggressive growth and tech funds. Even if growth stocks drifted lower, historic sales patterns indicate that investors would keep buying shares for a few months.

"There's a lot of inertia in fund sales. ... It takes Joe Six Pack six months of hot performance to jump onboard and it takes that long for recognition on the downside too," says Burt Greenwald, a Philadelphia-based fund consultant.

If growth stocks and Janus' funds stay down for a couple of quarters though, the firm's brand power might stretch a bit thin. Janus spokeswoman Shelley Grice admits that April's flows into Janus' coffers did slow a bit.

Despite Strategic Value's success, Janus still needs a growth-stock recovery. After all, Decker might not worship a growth god, but all of his colleagues clearly do.

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