TheStreet.com's weekly Meet the Family typically focuses on a mutual fund family of note that might fall a little below your radar screen. No one can accuse Janus Funds of that. However, given that the firm has decided to break the silence with a conference today, we thought it would be fitting to focus this week's item on getting reacquainted with Janus. Read on.
Janus: Where It's Been, Where It's Headed
A Roundup From the Janus Conference.
A Q&A With Janus Global Technology's Mike Lu.
Meet the Family: A Look at Janus Offerings.
A Meet the Family Q&A With Janus Mercury's Warren Lammert.
That the market can be a two-headed beast is no news to the Janus funds. The fund family -- whose emblem is the two-faced Janus, god of new beginnings, looking in two directions -- may be forgiven for casting the occasional wistful look back across the threshold, because it would be hard to top its performance in 1999. Four of the funds cracked the Century Club, with most of the rest posting sizzling returns.
But after several years of white-hot performance, many of the funds have stumbled this year in tandem with the broader decline in technology stocks. Janus has also gotten knocked for an ill-chosen $930 million private placement it made early this year in
, an Internet outfit that's managed to nose dive nearly 84% year to date.
Besides the nasty market, the Denver-based fund family's had a few other well-publicized setbacks. This year, parent company
Kansas City Southern
spun off Janus as part of a holding company,
, disregarding the fund family's desire to go public on its own. And this summer, highly regarded chief investment officer Jim Craig resigned to manage a charitable foundation.
Still, lots of folks would give their right arm to have Janus' problems, like a track record that's tough to surpass and the mountains of cash it's had to put to work (though the fund family had started to see some net redemptions on the retail side by late last summer).
Janus earned such a good reputation with investors over the last couple of years that it's had to slam shut the doors on a raft of funds, including
Global Life Science,
Worldwide. Fund families generally get kudos for closing funds before they get too big, though some of the closed funds -- like the $50 billion flagship Janus -- were already massive.
Another plus for Janus investors: Its funds are relatively cheap, with average operating expenses of 0.94%, well below the average of 1.38% for all funds.
Of the funds that remain open,
Mercury are certainly the best known. Mercury's had some uneven years, but in its six full years of existence, it's managed to finish three of them within the top 6% or higher of funds in its category. It can boast of ranking in the top 4% of all large-cap growth funds for the five-year period (Check out the
A Meet the Family Q&A With Mercury skipper Warren Lammert..
Mid-cap growth fund Enterprise is run by veteran Jim Goff, who's been at the fund family since 1992. Enterprise also has an impressive five-year record, ranking within the top quartile of its peer group. But its high standing masks some volatile performance. For three straight years in the mid-'90s, the fund finished in the bottom quartile, measured against similar funds. Then it turned in two stellar performances in a row that put it in the top 11% of its peers.
It's also worth noting that, with $6 billion in assets, it's gotten harder for the fund to move in and out of mid-caps as easily as it did in the past.
With standout performances from so many of Janus' growth funds, the Balanced fund hasn't gotten much press. But it deserves some: This fund is in the top 2% of similar funds over three- and five-year periods. Over a five-year period, it claims annualized returns of 18.11% -- not too shabby given its big stakes in bonds. As of last spring, the bond weighting was nearly half, with the majority in AAA issues (though another 18% were in BBB bonds).
Meanwhile, the stock portion of the fund includes growth holdings such as
, though the top holding in the third quarter was
. Karen Reidy became manager at the beginning of this year, but she's been with Janus since 1995.
Janus' value offering, Special Situations, hasn't done quite as well, with a three-year performance ranking of 65%. The fund had compiled a good record up to this year, outperforming its peers in two out of three years. But Special Sits has suffered in the new market -- down 20.4% through the end of November -- a showing 8% worse than its peers. One factor: the fund's sizable weighting in multimedia and cellular telecom stocks. As of the third quarter, it had nearly a fifth of its assets in those two areas.
For good or ill, there's no question this value fund has Janus' imprimatur. As of last spring, Special Situations' top holding was
(now China Mobile Limited)
, with over 9% of assets. China Mobile has actually held up pretty well as telecom stocks go, down 4.6% year to date. But most value managers, to put it mildly, would not take a huge stake in a Chinese cellular telecom provider. As of the third quarter,
had moved into the top spot.
Special Situations manager David Decker has taken on another charge this year, one of several closely scrutinized new funds from Janus. His new fund, Strategic Value, looks more conservative: Its biggest stake as of the third quarter was in diversified manufacturing. It's up 6.9% year to date.
Orion, which has been around only since June, is a more typical Janus offering, with huge weightings in growthy technology areas. But so far it's suffered from holdings in telecom services and equipment, which together make up about a fifth of the fund's assets. It's down 24.6% since inception. Meanwhile,
Janus 2, scheduled to be launched at the end of this month, is expected to be fairly similar to Janus, the massive flagship fund that's now closed.
Those funds aren't exactly making their debut in the best of times, and it's too early to judge their performance. But their warm reception -- Strategic Value already claims over $3 billion, while Orion's taken in $1.2 billion -- speaks volumes about Janus' reputation.
This year, investors who'd come to take fat gains from Janus for granted can be forgiven for feeling a little frustrated. But this isn't the first time the fund family's weathered a downturn, notes Morningstar analyst Scott Cooley, pointing out that in the early 90s, leading fund
Janus Twenty had a couple of tough years. It recovered, and its long-term record is exceptional. "Janus is on the growth edge of growth," says Cooley. "Performance swings are going to be a lot more extreme."
K.C. Swanson has portions of her 401(k) invested in Janus Twenty and in Janus Global Technology.