The firm's batting average on manager changes has been poor lately.
Janus has seen more than its share of peaks and valleys over time. To its
credit, the firm consistently has come back from the depths. After a crash and
burn in the 2000-02 bear market (due to heavy investments in tech and telecom)
and the exposure of Janus' involvement in the 2003 market-timing scandal, the
firm got back on its feet due to solid performance runs by managers David
Corkins and Scott Schoelzel.
But then Janus suffered through a wave of exits: Corkins, along with
promising young manager Minyoung Sohn, left in in late 2007 to start a new asset
management firm. Schoelzel retired at the end of 2007.
The manager changes continued at a steady trickle. For example, David Decker
Contrarian JSVAX last
year, and just 10 days ago John Eisinger of Janus
Global Select JORNX left.
Some departures have been Janus' idea, but either way, it shows the firm still
has work to do. All the while, performance, which had picked up nicely, has
fallen off in the last couple of years.
Janus' talent losses have taken a
toll. The departures in 2007 led to a number of new assignments at some of its
most prominent funds. Jonathan Coleman replaced Corkins at Janus
Fund JANSX, Ron Sachs took
on Schoelzel's role at Janus
Twenty JAVLX and Janus
Forty JARTX, and Marc
Pinto filled Sohn's shoes at Janus
Growth & Income JAGIX.
While each manager had posted solid records at previous posts, these changes
haven't worked out well. Coleman, Pinto, and Sachs lag 65%-80% of their
large-growth peers during the 4.5-5 years they've managed their current
charges--which are Janus' four largest domestic all-equity funds--and each fund
trails its benchmark (the Russell 1000 Growth Index for all except Growth &
Income, which competes with the S&P 500) by an annualized 2.5 to 4.5
A number of other manager changes at Janus' equity funds since then haven't
yielded good results thus far, either. Here's a quick look at them:
- Janus Global Select: Eisinger took over this fund when Sachs moved to Janus
Twenty and Janus Forty in January 2008. He posted wildly varying returns, and
the fund finished in the bottom decile of the world-stock category from the time
he took over until he left the firm on Aug. 3, 2012.
Worldwide JAWWX: This fund
lost its footing in the 2000-02 bear market and hasn't found it since. After
Helen Young Hayes retired in 2003, comanager Laurence Chang ran it solo for one
year, then left the firm. Contrarian investor Jason Yee took over, struggled
during both the mid-decade rally and 2008's decline, then left Janus. Laurent
Saltiel got off to a good start, but jumped ship to Alliance Bernstein just 13
months later. Clearly unprepared for his departure, Janus embarked on a 10-month
search before hiring George Maris in early 2011. Maris ran portfolios for more
than seven years with better-than-average results before joining Janus, but that
track record was split between three different firms. He's off to a slow start
at Worldwide; the fund is 5 percentage points behind the category norm in his
first 17 months on the job. Despite that sluggish start, Maris was just tapped
to replace Eisinger at Global Select.
- Janus International Equity JAIEX: Saltiel had managed this small fund for 3.5 years
when he left in May 2010. The installation of his three replacements made
fundamental sense--Julian McManus, Guy Scott, and Carmel Wellso were
accomplished foreign-stock analysts for Janus--but they, too, have stumbled thus
far. That fund lags three quarters of its foreign large blend peers in their
first two years managing it, even though the fund's growth tilt should have
given it a slight edge.
- Janus Contrarian: Decker, the fund's lead manager since its 2000 inception,
left the firm in June 2011 amid a run of poor, volatile performance. Daniel
Kozlowski was hired to take Decker's place. The fund has struggled in his first
13 months on board, but particularly in Kozlowski's first three months as some
of Decker's less-liquid holdings were difficult to dump as stocks declined
sharply. Kozlowski's hiring makes sense: He worked closely with Decker as an
analyst at Janus from 2000-08 before leaving to start a hedge fund, and has
toned down the fund's bold look to some degree.
Morningstar's Analyst Ratings reflect our concerns about the uncertain
prospects of the above funds: Janus Fund, Janus Forty, Janus Global Select,
Janus Growth & Income, Janus Twenty, and Janus Worldwide all earn Neutral
ratings. (Morningstar hasn't yet published a rating for Janus Contrarian or
Janus International Equity.)
Janus' analysts also have struggled during the latter part of the period from
2008- to mid-2012, particularly those who cover U.S. large caps. That's
reflected in the weak 18-month performance of Janus Research JAMRX, an analyst-run U.S. equity
Global Research JARFX
boasts a strong longer-term record, but its performance has moderated
There have been a couple of changes at Janus
that have worked out or look quite promising, but they're focused in what have
long been relatively minor parts of the firm's lineup: small- and mid-cap U.S.
Triton JATTX: Chad Meade
and Brian Schaub took the helm of this then-young fund in July 2006 and have
knocked the cover off the ball. It invests in a mix of small- and mid-growth
stocks and has roared ahead of most small- and mid-growth funds since then. They
also took over the small-cap-focused Janus
Venture JAVTX in July 2010
and have done a stellar job there thus far.
Enterprise JAENX: When
Coleman stepped off this mid-growth fund in November 2007 to run Janus Fund,
Brian Demain (previously a comanager on this fund) took sole control. The fund
has since beaten roughly two thirds of its peers.
- Furthermore, Janus' fixed-income team has done a fine job since the hiring
of Gibson Smith as chief investment officer in 2006. But although assets in this
area have grown, bonds are still a relatively small part of the overall pie
The outcomes of Janus' manager changes raise questions about the strength of
its bench, which may have gradually eroded from the departures of the last
decade. And given the struggles of the managers who have been in place for
nearly five years, that bench may be tested yet again.
It's clearly not all gloom and doom at the firm. In addition to the
attractive options in small- and mid-cap equity and in fixed income, Brent Lynn
Overseas JAOSX owns a fine
long-term record--although shareholders can't be happy with the fund's brutal
performance over the last 19 months due to a big bet on emerging markets.
Meanwhile, the U.S. large-cap funds run by Coleman and Sachs have mounted a
comeback thus far in 2012. But it will take time for Janus to restore confidence
in what used to be its strongest areas.