While Janus of Denver and Fidelity Investments of Boston have been struggling to attract assets, several other fund groups have picked up their slack and have climbed in overall fund sale standings, according to industry figures.
August was a weak month for both Janus and Fidelity, as flows sagged. Fidelity suffered a net outflow of $1.5 million, still an improvement over the firm's July flows, when the firm suffered a net outflow of $2.9 billion, according to data from Financial Research Corporation of Boston.
Although Janus had net inflows of $2.2 million in August, flows were down from the firm's previous month's flows of $2.3 billion, according to FRC. Part of the slow down in asset accumulation at Janus can be attributed to the recent closing of several of its funds, said Steve Cummings, an analyst with FRC. Some of the assets that would have gone into Janus funds are instead flowing into other funds that have the performance of some of Janus' closed funds, he said.
Janus has also suffered from a shift in the markets against its concentrated growth investment focus, allowing firms like Invesco of Denver to capture some of what Janus might previously have captured, said Scott Cooley an analyst with Morningstar of Chicago.
"[Invesco] has executed so well across a number of funds ... and that's reflected in their inflow numbers," he said.
Invesco's year to date flows climbed to $8.4 billion in August, up from last year's figure of only $9.9 million for the same period, according to FRC. Contributing to that growth is the firm's wholesale channel, the firm's fastest growing channel, said Ray Cunningham, senior vice president and national sales manager for Invesco. The firm has doubled its number of wholesalers from 11 to 22 since the beginning of the year and it plans to add 13 more by the first quarter of 2001, he said. The firm's total net assets have nearly tripled over the past two years, climbing to $57 billion in August, according to the firm.
Some of Fidelity's outflows can be attributed to a mismatch between Fidelity's marketing strategy and investors' demands for high performing funds, said Burton Greenwald, president of Burton J. Greenwald Associates, a mutual fund consulting firm in Philadelphia.
"We are going through a phenomenon when the only funds that have captured a larger market share are those funds with shoot-the-lights-out performance," he said. "Fidelity is wary of reaching for that type of performance or promoting that type performance."
Because Fidelity has such diversified funds, they are rarely the top performing funds and therefore are often overlooked by the market, said Eric Kobren, executive editor of Fidelity Insight, an independent newsletter based in Boston.
"There is no question, however that we are over-saturated with product as an industry," he said. "The tremendous information flow has pushed people into the hottest performing funds ... and Fidelity does run diversified pools of money so they rarely are going to be on the top of the heap."
But Fidelity also offers almost every style of mutual fund, so even if one style is out of favor, it is sure to offer another that is popular with investors, said Cooley. That protects the company from a sustained outflow of assets, he said.
Janus would be wise to diversify its holdings and its investment focus because it could suffer sustained outflows as result of a heavy reliance on a few investments that have not performed well recently, Cooley said.
"A lot of people in Janus funds were chasing returns," he said. "If there is a sustained value rally, Janus doesn't have many funds that can benefit. But Fidelity covers every investment style you can imagine."