Janus Capital Group Inc. has moved to expand its Asian distribution by signing an agreement to offer its funds through 30 Taiwan banks. The move comes as its assets under management fell again in the first quarter.
The Denver mutual fund company announced last week that it will offer 10 Janus funds through 30 of Taiwan's 40 banks. Janus began selling its funds in Taiwan 18 months ago through an exclusive arrangement with Citigroup and has accumulated $500 million of assets. Four months ago, Janus got permission from Taiwan's Securities and Futures Commission to seek out local distribution.
Richard Garland, chief executive officer of Janus International, said Taiwan is Janus' largest market in Asia, with one-quarter of its $2 billion of Asian assets.
"We see Taiwan as one of our biggest growth markets in Asia and outside the United States," Garland said.
Janus' asset base has fallen considerably in recent years. The company announced last Tuesday that its assets under management dropped 3.8% in the first quarter, to $132.7 billion worldwide and down from more than $300 billion at the stock markets' peak three years ago.
It also said first-quarter profit plummeted 60% to $38.6 million, or 17 cents a diluted share, from $97.2 million, or 42 cents a diluted share, the year earlier.
Distributing funds through banks in Taiwan is attractive for Janus because mutual fund distribution in Asia is controlled by banks, Garland said, and unlike European and North American markets that focus on selling proprietary products, Asian banks have an open architecture model.
Nationwide Raises Its Bet On Separate Accounts
The big insurer Nationwide Financial, which began selling separately managed accounts through banks, financial planners and accountants last week, is jumping aboard a product juggernaut that a research firm says should reach $1 trillion of sales by 2007.
Matt Riebel, president of Financial Institutions Distributors Agency Inc., the Nationwide division that distributes through banks, said the Columbus, Ohio, insurer, which began selling separately managed accounts in December, sees a significant opportunity in the bank channel.
"We want to get in at the infancy," Riebel said. "We want to be able to define what the market looks like."
The company manages $102.9 billion of assets and will look to leverage its 400 banking relationships to develop fee-based business. As part of this push, Nationwide is also selling mutual fund wrap accounts.
Nationwide has had success in the bank channel with its stock-market-based life insurance products. Last year it had $38.1 million of recurring-premium sales in banks, and all of that came from the equity-based product.
Nationwide will offer managed accounts to people for a minimum investment of $100,000 and mutual fund wrap accounts to those with at least $25,000 to invest. Riebel said sales of mutual fund wrap accounts and managed accounts remain small nationally but that the upside is significant as interest in the products grows.
A report issued by TowerGroup of Boston predicts that managed accounts will grow at a compound annual rate of 18.5% during the next five years - from $398.7 billion of assets at Dec. 31 to $1.1 trillion in 2007.
Matt Schott, the TowerGroup research analyst who wrote the report, predicted that within 15 years, managed accounts will have the dominant share of all direct ownership of equity and bonds by retail investors.
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