Morningstar is reversing its message of warning investors to stay away from Janus funds and instead is suggesting that investors approach the beleaguered mutual fund company with "caution," St. Paul Pioneer Press reports.
Morningstar had become one of Janus' toughest critics after New York Attorney General Eliot Spitzer made the company a central figure in the widespread scandals that accused leading mutual fund providers of improper trading activities. After the scandals broke in September, Morningstar made headlines by waving investors away from Janus' funds.
But recently published comments by Morningstar give investors a tentative green light to resume doing business with Janus a type of upgrade that suggests that the era of the scandals is finally lifting. Experts say the news could improve the performance of some Janus funds by helping to staunch significant outflows of assets that were accelerated by negative press and derogatory comments from analysts.
Janus' funds bled $5.9 billion in May from redemptions even though they displayed strong performance during that period.
Morningstar analyst Dan McNeela has since constructed a turnaround story about Janus based on its dismissal of senior executives who reportedly kept silent about improper market timing and the company's willingness to implement new investor protection measures.