Janus to Soft-Pedal Upcoming Orion Fund Launch

Fearing an avalanche of cash into its new Orion fund, Janus has adopted an unusually low-key strategy for the fund's rollout, which begins this week.

A four-week, pre-launch subscription period, during which investors can reserve shares of the fund at $10 each, starts Wednesday. But to keep the new fund from being bloated before it commences operations on June 30, Janus is pitching the new fund only to its current shareholders.

"People just hear the name Janus and before they've blinked, they've written a check," says Morningstar analyst Russ Kinnel. "I can certainly understand them wanting to control the cash flow, and promoting it less will help."

You don't have to be a current Janus customer to buy the new fund, of course, but Janus isn't going out of its way to spread the word. Janus won't team with brokerage powerhouse Charles Schwab (SCH) to promote Orion's subscription period, as it did when it launched the (JSVAX)Strategic Value fund last February.

That subscription effort raised more than $1 billion, even though the value investment style was out of favor, little was known about the fund, and Janus had no real reputation for value investing. Strategic Value's assets had grown to $2.9 billion by the end of April, according to Morningstar.

The glut of cash made it tough for manager Dave Decker to get the money invested, a unique problem Janus hopes to avoid with Orion.

"We want to take a measured approach with this one," says company spokeswoman Jane Ingalls.

The new Orion fund appears to have the makings of a hit. It will resemble Janus' $35.4 billion (JAVLX)Twenty and $8.5 billion (JAOLX)Olympus funds, both of which are closed to new investors. The new fund will focus on aggressive growth stocks of any size, taking big bets on its picks. The fund will hold only about 20 stocks.

Ron Sachs will hold Orion's reins. A former attorney, Sachs joined Janus in July 1996 and helps Jim Goff manage the $7.7 billion (JAENX)Enterprise fund. That fund illustrates the strengths and weaknesses of Janus' signature growth style. Last year the mid-cap growth fund rode a tech-heavy portfolio to a whopping 122% return, but over the past three months the fund is down a painful 34.3%.

Because the firm's other growth funds invest similarly and have many holdings in common, most of its funds are hurting this year. Still, it will probably take more pain before investors sour on a shop whose stock funds posted an average 80% gain last year.

"Until you get six months or a year of sustained underperformance, the Janus name will still resonate with investors," says Philadelphia fund consultant Burt Greenwald.

In fact, six of this year's top 10 selling funds through April 30 belong to Janus, according to Boston consultant Financial Research. Janus has taken in more than $32 billion in fresh cash this year, compared with $9.8 billion for runner-up Putnam Investments.

Investors have thrown so much cash at Janus that seven of its 15 stock funds are closed to new investors to keep steep in-flows from weighing down its high-octane portfolios.

Still, keeping the lid on a new offering like Orion is like Leonardo DiCaprio trying to slip into a crowded Burger King to use the bathroom without being noticed.

Although Janus will mostly only pitch the new fund to current shareholders, that's not such a small audience: There are more than 4 million of them, according to a recent company statement.

Given the paucity of Janus growth funds open to new shareholders, it wouldn't be surprising to see this new fund raise as much or more than Strategic Value did.

"I suspect there's a pretty unsatisfied lust for anything Janus brings to market," says Greenwald.

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