A fund could've made a pretty penny betting correctly on the wild swings in the biotech sector this year. On the other hand, as

Janus

had the misfortune of learning firsthand, a fund could get creamed if its market timing was off.

Because of its ill-timed moves in biotechs, the

(JAGLX) - Get Report

Janus Global Life Sciences fund is off 11.9% for the trailing three-month period, putting it at the bottom percentile among health care funds, according to

Morningstar

. Still smarting, Janus appears to be getting stodgy in its health care bets, going against the fund's aggressive reputation that won it many fans.

"When

biotechs turned south,

Global Life Sciences got crushed," says one fund observer. "But instead of taking profits, they bought more stock. When the bounce proved false, they frantically tried to dump biotech stock and pile into the drugs and even cash."

The end result: "They got hurt leaving biotech and paid too much for the safe stuff," the fund watcher says. In recent days, drug makers have fallen, and Global Life Sciences' increased stake doesn't help.

Meanwhile, biotechs are showing some signs of being on the mend. Since that sector hit a bottom on April 18, the stocks have recovered, driving the

American Stock Exchange Biotech

index up 18%. The fund's partial retreat from the group kept it from participating.

Janus confirms that its concentration of biotech and genetics stocks dropped significantly in March and April, though a spokeswoman couldn't say whether the decline represents a move or market fluctuation. Portfolio manager Tom Malley couldn't be reached for comment.

What happened to this once-hot highflier, which racked up a 61% gain in 1999, is a case study in the perils of market timing in a risky sector. At the end of February, biotech was the largest industry in the fund, representing more than 28% of its holdings. For good reason: in the last quarter of 1999 the American Stock Exchange Biotech index was up 54.9%.

But then the sector took a beating after hitting its apex on March 7, exacerbated by

President Clinton's

and British Prime Minister

Tony Blair's

comments that any intelligence gleaned from the Human Genome Project should be made publicly available.

According to multiple accounts, during the selloff the fund bought up more biotech shares, expecting the sector to post a strong recovery. After taking a beating, it pared back its biotech holdings at discounted levels, and bought into other health care sectors within its mandate that it considered safer plays, such as pharmaceuticals.

The moves have translated into cuts deeper than those seen in the biotech sector alone. Since March 14, the fund is off 20.1%, compared with a 3.1% drop for the Biotech index.

There are other contributing factors to the weak performance. The Janus family scooped up $930 million of

Healtheon/Web MD

(HLTH)

in a private placement at 62. The stock closed at 18 3/4 on Monday and is still a holding, the spokeswoman says.

At the end of April, the Janus fund's biotech holdings totaled 11.2%, putting it in third among sectors behind pharmaceuticals and therapeutic devices. Though the company still says it's bullish on the sector, which is researching the biological basis for medicines and therapies, it's clear that the Denver-based growth giant has gotten slightly more conservative.

These days, biotechs hardly move the fund at all, whereas before there was greater synchronicity. When the Biotech index soared 14.1% on April 28, Global Life Sciences crawled just 2.4%. A similar thing happened on April 17 when the index moved 10.2% and Janus went up only 5.3%.

Of course the same holds true on down days, too. When biotechs declined by 6.3% on May 2, Janus fell just 1.5%.

That's the point, say some investors. Janus, unlike some of its health care competitors, is a diversified offering able to move around the health landscape looking for winners. "The reason we bought it is because it was a relatively broad health care play," says Robert Markman of

Markman Capital Management

in Minneapolis.

Markman says Janus is still poised to take advantage of biotechs, even if it's lightened its load. Because of the relatively small number of players in the sector, there will be a boost if biotechs have their day in the sun again.

But not everyone is willing to let Janus grow conservative. Barbara DeMartini, a money manager with

Ventur Asset Management

in Locust Valley, N.Y., says she bought the fund for clients because of manager Malley's penchant for aggressive sectors. She's sticking with Malley for now, but she's watching.

"We're not a huge adoring fan

of Global Life Science right now, but we do believe in the sector," she says.