Janus

shuttered most of its sexiest growth funds to reduce steep inflows, but the firm might want to be careful what it wishes for.

The latest cash-flow figures show that investors are still rabid for Janus' flavor of high-octane growth investing with a taste for technology and biotechnology stocks, but closed doors at eight of Janus' hottest funds are sending them elsewhere. Meanwhile, most of the Janus funds still open to new investors aren't shooting the lights out. Consequently, while Janus, which manages more than $300 billion for 4 million investors, is still this year's top-selling firm through Aug. 31, flows into its funds in August were about one-sixth what they were the month before. And early flow estimates for September indicate that, for the first time in years, investors are taking more money out of Janus stock funds than they've invested.

For Janus shareholders the news is probably good, since more modest cash flows should help Janus' vaunted stock pickers get back on track -- an

unprecedented geyser of cash triggered the closures and may have bogged the managers down. That said, if outflows become more significant, they can also hamstring a portfolio by forcing a manager to sell stocks to meet redemptions.

Janus officials say they're not concerned by the outflows.

"We're really not surprised," says Janus spokeswoman Shelley Peterson. "We saw such tremendous inflows that we took the unprecedented step of closing our top-selling funds in the interest of our current shareholders."

But from Janus' point of view, continuing outflows might highlight waning confidence following the

departure of chief investment officer Jim Craig and

chief financial officer Steven Goodbarn following the firm's

reluctant bundling with

Berger Funds

and

DST Systems

in a spinoff from parent

Kansas City Southern

. (Janus Capital, Berger Funds and DST Systems are now known as

Stilwell Financial

(SV)

.)

"I'd be much more concerned if they were getting the big inflows they saw earlier this year. They were getting a huge amount of money and it was going to change the way they manage their funds," says Russel Kinnel, director of fund analysis at Morningstar. "But if they get significant outflows, that's not healthy either because that can cause disruptions too and few Janus managers have had to deal with that before."

Regarding the outflows, "I think there are three factors at work," says Philadelphia-based fund consultant Burt Greenwald. "Number one, while their performance is strong, it's not as outstanding as it's been

compared with peers in recent years. They're not posting the outsize gains they've had. Number two, they've obviously closed many of their most popular funds. And number three, there's a growing apprehension as to whether or not Janus is starting to show some cracks in their facade. Craig left, the CFO just left and the departures suggest some dissonance in the upper ranks."

Performance has slipped noticeably among Janus' funds, many of which bet big on the same stocks. Of the dozen Janus direct-sold stock funds with a three-year track record, all but

(JASSX)

Janus Special Situations beats its average peer over that time period. But of the 14 direct-sold Janus stock funds that launched before Jan. 1, only four are beating their average peer and all of them are closed to new investors.

Eight of these 14 funds are under water for the year and trailing the

S&P 500

, the yardstick that many investors use to size up their funds. It's a stark contrast to 1999 when all of the firm's stock funds beat that benchmark and their average peer.

These dipping returns and slackening flows might be bad news for stocks such as

Nokia

(NOK) - Get Report

,

Cisco Systems

(CSCO) - Get Report

, and

Time Warner

(TWX)

. At the end of the second quarter these three stocks were

Janus managers' faves. If the firm has less new money to keep plowing into these stocks, it might be tough for them to stay afloat.

It might be even worse for those stocks if Janus managers have shifted gears a bit and started to commit more money to more traditional fare such as

General Electric

(GE) - Get Report

, the current speculation among Wall St. traders.

It seems investors still like the Janus formula, even if they're seeking it elsewhere. Large-cap and mid-cap growth funds, the labels worn by most Janus stock funds, were the top-selling fund categories in August, according to Boston fund consultancy

Financial Research

, or FRC. Tech- and healthcare-sector funds were also in the top 10, indicating that investors haven't given up on the go-go sectors where the closed

(JAGTX) - Get Report

Janus Global Technology and

(JAGLX) - Get Report

Janus Global Life Sciences put their money.

Oak Associates

, a growth manager whose tech bent

draws Janus comparisons, was the third-best selling shop in August, gulping down a whopping $1.3 billion in fresh cash. From strong performance and inflows, the firm's assets have grown from $2.1 billion to nearly $10 billion over the last 12 months ended Aug. 31, according to FRC.

If Janus' newer stock funds, like Janus Strategic Value and Janus Orion, or the Janus 2 fund, which is slated for a year-end launch, can rocket to the top of their respective categories, flows might shoot up again. But Janus' more generic brand advertising -- as opposed to overperformance-touting ads -- hints that their focus might be on asset retention rather than drawing new money. If one or two fund managers leave, however, that could be tough.

Janus' Peterson denies that morale among the firm's vaunted manager corps has slipped along with the funds' performances and flows.