As the fastest-growing fund shop in the nation,

Janus

has a problem other fund companies would envy: The firm is being flooded with checks earmarked for its popular -- but closed -- funds, such as

(JAVLX)

Twenty and

(JAGTX) - Get Report

Global Technology.

Now Janus has come up with an unusual way to handle those checks.

It keeps them.

No, not in someone's pocket, but in a money-market fund in the investor's name. That's where the cash stays until the investor does one of two things: pick another Janus fund or simply ask for the money back. If an investor does neither, the money stays in the money-market fund.

Observers are split over the propriety of the new policy, outlined in a prospectus supplement filed with the

Securities and Exchange Commission

and enacted last week. Some say it's questionable to put investors' money in a fund they didn't ask for. But others say it's a practical solution to the problem that could only get worse, given the firm's popularity with investors and its relatively small number of retail equity funds (15).

"It's quite unusual, but I think it's pretty creative," says Burt Greenwald, a Philadelphia-based fund consultant and 40-year industry veteran.

Other closed Janus funds, besides Twenty and Global Technology, are

(JAVTX) - Get Report

Venture and

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Overseas. The four funds have a combined $64.4 billion in assets, and thanks to their

average

125% return in 1999, continue to draw attention from the financial news media.

If you send in a check to buy shares of a closed fund you don't already own, or if you incorrectly apply for an account -- like writing $500,000 on your application and sending in a check for $5,000 -- you'll end up with a Janus money-market account. Within about five business days, you'll get a confirmation of the new account, a copy of the money-market fund's prospectus and a letter asking if you want to keep the account, exchange to another Janus fund or take your cash back. (Investment minimums for Janus funds range from $500 to $2,500, depending on the type of account.)

The firm will follow the same procedure if you send in a check for a fund that hasn't launched yet, such as

Orion

, the Twenty-like concentrated

growth fund

slated for a June 30 launch.

For investors, it saves the aggravation of having to write another check and fill out another application -- tolerance for snail mail and old-school protocol runs a bit low these days. And for Janus, well, let's face it, it makes it more likely the customer will leave the money in the Denver-based fund shop's hands.

"It's smart from Janus' perspective. What are the odds you won't open an account?" asks Jim Folwell of

Cerulli Associates

, a Boston-based fund consultancy.

Janus spokeswoman Jane Ingalls says the new policy bloomed from the hassle and headache shareholders went through under the old system of kicking checks back to investors, who then had to start all over again. The new system is simpler for both shareholders and the company, she says, since investors often simply choose another Janus fund and buy shares anyway. She also stresses that, as always, the firm will redeem the money-market shares immediately upon request.

Janus didn't disclose how much misdirected money is involved, but even if it's just a little runoff, it could add up since the firm is taking in more new cash than mutual fund heavyweights like

Fidelity

and

Vanguard

. Greenwald says he wouldn't be surprised if these orphan checks add up to "eight or nine figures."

It's not a wild estimate, given investors' serious crush on all things Janus. Remember, the firm's stock funds averaged an 81.6% return last year. The group started 1999 with about $75 billion in assets and finished up the year with more than $170 billion. Then it took in another $9 billion in January -- about 50 cents of every dollar invested in domestic stock funds that month, according to Boston fund consultant

Financial Research

.

Some fund industry vets say the practice, while above-board, is a bit on the aggressive side for most of the industry's legal types.

"Most of my more risk-averse clients wouldn't ask about this. It's not wrong at all, but it's a bit risky," says Pamela Wilson, an attorney specializing in mutual funds with

Hale & Dorr

in Boston

The issue is that investors are asking for shares of one fund and getting another, without seeing its prospectus first. Of course, the beef is more in principle than in practice. We're talking about an ultraconservative money-market fund, not, say, a wildly fluctuating emerging-markets fund. Still, for some, the practice instinctively raises a flag.

"I always thought if you couldn't give the person the fund they asked for, you're supposed to give the check back," says Cerulli's Folwell.

Beyond these questions, however, it may just be a move that many investors will appreciate. Many Janus stock funds are run with a

similar growth style, and Janus managers often hold many of the same stocks as their colleagues. So a lot of investors are probably happy with the Janus label and less picky about the particular fund.

Maybe the most troubling issue has nothing to do with the practice at all, but with investors unaware of key facts about a fund they want to add to their portfolios. Investors sending in checks for closed funds are probably doing so because they've heard the funds' names mentioned in the media, says Wilson of Hale & Dorr.