Janus Goes Global to Find Values, but You Don't Need to Follow It

The firm launched its Global Value fund, but here are some better options.
By Ian McDonald ,

The manager of Janus' new

Global Value fund made his case for bargain-hunting overseas during a Webcast Thursday night. But even if you buy his argument, you probably shouldn't buy his fund when it launches at the end of the month.

Other Junk

Don't Give Up on Mutual Funds

How to Build a Diversified Fund Portfolio

Beware the New Wave of Value Funds

The Big Screen: Health Care Funds

The Big Screen: Tech Funds

The Big Screen: Bond Funds

Lessons From the Fall: A Special Fund Junkie Report

With the majority of its tech-stuffed funds reeling from the

Nasdaq's

collapse over the past year, the usually close-lipped Denver fund shop trotted out Jason Yee on a Webcast to talk about the Global Value fund. The fund is slated to launch on June 29 after its current subscription period, when investors can reserve launch-day shares at $10 a pop through Janus or online broker

Charles Schwab

. ends. (Subscription launches often drum up IPO-like urgency, but that's unfounded,

as we've explained in the past.)

Speaking in broad terms, Yee laid out the standard argument for investing overseas (diversification) with a value or bargain-hunting style (less downside risk than buying pricey shares of highfliers). But given Janus' decided growth bent and the plethora of foreign value funds with a proven track record, there seems little reason to take more than a wait-and-see approach to this fund.

Yee, whose only prior portfolio management experience was helping run a foreign small-cap fund for institutional investors at Denver's

Bee & Associates

between a past and current stint as an analyst at Janus, says the fund will hold 40 to 50 stocks of companies he thinks are trading at a deep discount to what he thinks is their true worth. He has virtually no constraints with a prospectus that lets him buy stocks of any size in any country in the world, but he says he plans to invest primarily overseas.

True to the firm's policy of not discussing individual stocks, Yee would only say that he's intrigued by the battered technology sector and financials, a more traditional haven for value investors, particularly when falling interest rates spur loan activity.

"Expect us to be looking in areas that are down. We might not have looked at tech a year ago, but we might look more closely now," he said. "We'll also be looking closely at financials in a favorable interest-rate environment."

Despite the market's current malaise, Yee thinks now is the perfect time to roll out the fund since "crisis and volatility represent opportunity" to value investors. That well-worn mantra sounds good, but investors might not concur.

In fact, that's probably the reason for the uncharacteristic pony show. Yes, investors dumped more than $1 billion into the fledgling

(JSVAX) - Get Report

Strategic Value fund, the growth shop's only current value offering, despite little promotion when it launched last March. But that was on the heels of a frothy 1999 when the firm's stock-fund managers loaded up on surging tech fare and rang up an average gain north of 80%.

Those returns have helped Janus' funds retain solid three-year records, but the firm's tech-heavy funds have taken a vicious beating over the past year. Just three of Janus' 15 direct-sold stock funds with a one-year record are beating their average peer over the past 12 months. And none have eked out a gain over that stretch.

And unlike many other value funds, Janus Strategic Value, run by David Decker, hasn't held up well. It's down 7.6% over the past year, trailing 87% of its large-cap value peers, according to

Morningstar

. Since Jan. 1, the young fund is down 4%, worse than 77% of its competitors. According to Yee's bio on the Janus Web site, he worked closely with Decker in running the winded fund.

The bottom line is that this fund might do well or it might sag, but there's no reason to rush out and reserve shares. Janus has flooded sites like Morningstar.com with banner ads touting the fund, and Schwab has sent an email to its millions of customers touting the fund, too.

Fact is, if you're interested in a foreign fund with a value approach, we've shown you

how a foreign fund can boost returns and reduce risk and also

how you might shoehorn one into your portfolio. Now let's check out a short list of funds that might deserve your money.

This morning I sifted the foreign fund pack looking for those that beat their average peer over the past one-, three- and five-year periods, according to Morningstar. Then I yanked out funds that didn't have a value style, below-average expenses or a manager who'd been in place for at least five years.

Eight funds made the cut, including standouts like the no-load

(TBGVX) - Get Report

Tweedy Browne Global Value fund, whose management team claimed Morningstar's coveted Manager of the Year prize in the foreign fund category.

Considering Janus' unflattering near-term returns on both the growth and value side, Yee's near-rookie status and the bevy of solid alternatives, this new fund seems like a tough sell.

Loading ...