Janus Capital Group enjoyed the benefits of the market recovery and increased demand for its fixed income funds as it posted strong profits for the fourth quarter.
The Denver-based money manager reported a profit for the fourth quarter of $37 million, or 20 cents per share, compared to a profit of $8.2 million, or 5 cents per share in the third quarter. Assets under management increased 8.5% over the quarter to $155.2 billion.
For the full year, Janus (JNS) posted a net loss of $757 million, or $4.55 per share, which was partially the result of goodwill and intangible asset impairment charges, legal settlements and severance pay, including the $12.1 million paid to former chief executive Gary Black, who left the firm in July 2009. His replacement, Richard Weil, a former PIMCO executive and Denver native, will start work on Monday.
The firms’ Janus and Perkins funds both saw net inflows for the fourth quarter. Janus funds had net inflows of $1.5 billion, primarily due to growth in its fixed income funds. For the full year of 2009, Janus funds had $3.9 billion in net flows, 72% of which came from its fixed income funds.
However the picture wasn’t so rosy at its INTECH business, which saw outflows in the fourth quarter of $2.4 billion, contributing to full-year outflows of $5.6 billion. INTECH funds invest in U.S. large-cap equities. In a conference call Thursday, interim CEO Tim Armour said the recent underperformance by the funds was disappointing. However, he also pointed to other challenges, including investors shying away from U.S. large-cap equities and U.S. retirement plan sponsors’ reluctance to make rebalancing decisions and move their money in the uncertain market.
Geoffrey Bobroff, an industry consultant and president of Bobroff Consulting, questions how INTECH fits into the firm’s long-term strategy. “Under one roof, it’s hard to have a quantitative, passive fund and a fundamental active fund,” he said. “I wouldn’t be surprised if they sold [INTECH.]” And, he added, most of INTECH’s activities are institutional versus the retail intermediary focus of the other businesses.
Indeed, the retail intermediary business provided the biggest gains for the firm last year, posting $6 billion in positive net flows, versus outflows of $5.1 billion on the institutional side.
Bobroff said it will be up to the new CEO to continue to build Janus’ presence in the retail intermediary space. “They’re competing against some very well-established organizations. He needs to bring in some strong marketing people, the kind of talent that has the Rolodex to gain entry to these firms,” he said.