"Hedge funds are a good example of something we're looking at," said David R. Martin, who joined the
Janus thrived in the 1990s by focusing on growth-oriented mutual funds but, in the wake of the market's reversal in this decade, is seeking to rebuild itself. The company has said it wants to add value-oriented funds and is considering hiring management teams from other companies.
Martin would vet any acquisition targets to make sure they make sense financially. But he said his job is also to help the company set its business strategy. Within two months, he will take stock of the products Janus has, the way it delivers them, and their profitability in order to lay the groundwork for "the right business model," he said.
Hedge funds are the sole alternative investment product that Janus is currently looking at, he said.
Outflows from Janus' stock and bond funds have persisted month after month for years, sometimes exceeding $2 billion, but the pace of outflows slowed dramatically in May, and the company's goal is to make 2006 a year of net inflows, Martin said. The outflows, spurred by performance issues and the market-timing scandal in 2003, sliced the company's assets under management from more than $300 billion in early 2000 to $132 billion by this March 31.
Though the leakage slowed to $39 million in May, outflows still totaled $6.1 billion for the first five months of the year, according to
The company's top priority is improving its funds' performance, Martin said. Janus wants 70% of its funds to be in the top quartile of the Lipper rankings. Its one-year performance has reached that level, its three-year performance is close, but the company has "a ways to go" on its five-year performance, he said.
Once Janus rebuilds its performance track record, investors will come back, he said. Indeed, sophisticated and institutional investors will care more about the breadth of products that Janus has than will mainstream investors. "For the much broader population, it's all about 'How did I do?' " he said.
Half of Janus' assets are in growth funds; 21% are in "mathematical" funds. International and value funds account for 10% and 8%, respectively. Money market funds have 6% of the assets, and fixed-income funds 5%, according to the company.
Martin also is in charge of Janus' relations with its corporate shareholders. This consists of "continuing to convince shareholders that we really are focused on things we can control -- performance, building distribution, making the right investments," he said.
The impact of media coverage of Janus' regulatory troubles -- which ended with a $226 million settlement in April 2004 -- should dissipate within six months, he predicted.
Janus president "Gary Black has been very outspoken regarding their continuing focus on growth, and given the good performance they have enjoyed lately, what he is doing seems to be working," said Burt Greenwald, a mutual fund consultant at BJ Greenwald Associates in Philadelphia. "However, regaining investor and intermediary confidence is a huge challenge and will likely take another few years of superior performance to achieve."
A major issue for Janus has been distribution. During flush times, especially on the retail side, the company was "more passive" about getting its products sold, Martin said. "There is clearly room for a greater inflow, especially in the institutional space, where our distribution network has to be more completely built out," he said.
The company is also bulking up its intermediary sales division, whose clients include banks. It brought in a new head of the unit in last year's third quarter, and has added 15 wholesalers since August, for a total of 45.
