Tom Bailey, who founded mutual fund giant Janus of Denver more than three decades ago and since has gradually given up control over the firm, will step down as president and CEO of the company July 1, the company said last week.

Bailey, known for his work as the portfolio manager of the Janus Fund, which he founded with $500,000 in assets in 1969 with 30 shareholders, grew Janus into the nation's sixth-largest mutual fund company. Today, Janus has more than four million shareholders and roughly $159 billion in assets under management as of May 31 of this year, according to the firm.

The 64-year-old Bailey will continue his duties as chairman of the board of trustees overseeing the Janus funds, the company said in a statement. Janus will work with its parent company, Stilwell, to find Bailey's replacement, the company said. In the meanwhile, an executive team of five will continue to oversee the firm's daily operations. At this point, it is "too early to say" who Baily's replacement will be, said Janus spokeswoman Jane Ingalls.

As to why Bailey is stepping down, Ingalls said the firm's founder "believes it's the right time to shift his focus from his operational role as CEO to a fiduciary role as trustee." In addition, she said Bailey had confidence in a new executive team that includes Helen Young Hayes, Janus' managing director of investments, and Jim Goff, director of research. Both have overseen the firm's investment team since they were appointed to those posts early this year. "There's continuity there," she said.

Ingalls said Bailey's departure has nothing to do with turbulence in the markets or the economy. "Tom's career spanned 33 years," she said. "He has managed through good markets and bad markets."

Still, assets under management at Janus have declined 42% from $172.2 billion at year-end 1999 to $99.5 billion as of the end of this year's first quarter, according to Financial Research Corp. of Boston. The figure does not include Janus' institutional shares. In addition, during the first quarter of 2001, the firm laid off more than 1,000 workers and closed a call center in Austin, Texas, where many of the displaced workers were located. At the time, Janus cited upgraded technology for servicing shareholders and a reduction in the number of calls to its service centers as the reasons for the layoffs.

Parent company Stilwell, meanwhile, which also owns an interest in Denver-based Berger Funds, reported a 13% decline in first-quarter earnings this year. The company posted net income of $97.2 million, down from $111.4 million in the first quarter of last year.

But Janus has grown substantially under Bailey over the longer term. Assets under management increased from just over $6 billion in 1991 to $111.8 billion exactly a decade later. And from the single flagship Janus Fund that Bailey founded, the firm has grown to 25 retail funds, 14 institutional funds branded under its Janus Aspen Series and 13 offshore funds through its international division. The firm also offers 12 funds through its Adviser Series.

Since Stilwell bought the majority interest in Janus in 1984, Bailey has increasingly relinquished his control over the firm. He sold 600,000 shares of Janus Capital to Stilwell late last year, giving the parent company a 97.8% stake. In doing so, Bailey lost his contractual management and board selection rights, but continued on as the firm's CEO and president.

Brian Portnoy, an analyst with Morningstar of Chicago, described Bailey's most recent contribution to Janus as a "vague, mysterious oversight role."

"Bailey has not been involved with the investment process for quite some time," Portnoy continued. "The fact that a disengaged CEO is not going to be there is not important for the business."

Ingalls said Bailey is a "private person" who has been central in driving an anti-bureaucratic culture at the firm. "He's not a CEO who relishes the public spotlight, but he is known as someone who is incredibly loyal to the employees here," she said.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.