(Bloomberg) -- Janus, the money manager that hired bond legend Bill Gross in September, fell by the most in more than a month as investor flows slowed in the second quarter and profit trailed some analysts’ expectations.

Net income rose 23 % to $44.7 million, or 23 cents a share, from $36.3 million, or 19 cents, a year earlier, the Denver-based firm said Thursday in a statement. Analysts had expected earnings of 24 cents a share, according to the average estimate of five analysts surveyed by Bloomberg. The shares fell as much as 4.1 % in New York, the most since June 8.

Chief Executive Officer Richard M. Weil, 52, put Janus in the spotlight in the past year by hiring Gross and diversifying into new products as he sought to stem client defections. The firm has attracted new client money for three straight quarters, although the pace of inflows has slowed this year. Janus gathered $200 million in net subscriptions in the period ended June 30, compared with more than $1 billion in the prior quarter.

The “headline” today is that this period was the third “consecutive quarter of positive net flows,” Weil said in the earnings conference call. When interest rates finally rise, he said, investors will seek out unconstrained products, such as the one managed by Gross.

Janus this month acquired a majority stake in Kapstream Capital, a manager of global unconstrained fixed income, to help support Gross. That acquisition reduced earnings by one cent a share in the quarter, according to the statement.

The shares declined 3.6 % to $16.67 at 1 p.m. in New York. Janus stock had risen 7.2 % this year before today, compared with a 1.1 % gain for the 19-company S&P's Index of asset managers and custody banks.

ASSETS SHRINK

Janus’s assets were $189.5 billion at the end of June, down from $189.7 billion at the end of March. Investors added a net $300 million into Janus’s fixed-income products in the quarter, as the firm’s fundamental equity strategies lost $100 million to client withdrawals.

Gross runs the firm’s $1.5 billion Janus Global Unconstrained Bond Fund, which is beating 54 % of similar funds this year, with a return of 0.9 %, according to data compiled by Bloomberg. Janus added Kumar Palghat as a co-manager to the fund this month after buying the Kapstream stake. Palghat had previously worked with Gross at Pimco for 10 years.

The 71-year-old Gross started overseeing the unconstrained fund on Oct. 6 after losing a power struggle with management at Newport Beach, Calif.-based Pimco. He had built one of the industry’s best long-term records while running the Pimco Total Return Fund, which under his watch grew to be the world’s largest mutual fund.

Weil has likened his importance to Peyton Manning’s role as quarterback for the NFL’s Denver Broncos, calling him “that game-changing level of talent.”

While the Unconstrained fund has grown from $13 million before Gross joined, its monthly investment flows have been inconsistent. June was the worst month of investor flows for the fund since Gross joined in October, with clients pulling an estimated $39.8 million.

Investors have removed money in three of the nine months since the billionaire fund manager took over, withdrawing $13 million in May and $18.5 million in February, according to Bloomberg and Morningstar estimates.

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