Fund Times

Fund Times: Janus Worldwide Fires Manager

Katie Rushkewicz Reichart, CFA

After a rocky five-year tenure,  Janus Worldwide's JAWWX Jason Yee has gotten the boot. The world-stock fund struggled under Yee, losing 5.7% per year since he took over in July 2004 and trailing 80% of its peers. Most recently, Yee's penchant for beaten-down companies haunted the fund as some bad calls on financials--including an ill-timed move into beleaguered AIG in mid-2008--and a slew of underperforming tech stocks hampered the fund. Poor performance triggered redemptions, and the fund's assets plunged to $1.6 billion, down from $4.7 billion three years ago.

Yee is also out at  Janus Global Opportunities (JGVAX), a much smaller world-stock fund he ran since its launch in mid-2001. Greg Kolb has comanaged that fund since mid-2005. Yee had fared better there: The fund's record during his eight-year reign lands in the category's top quartile.

Laurent Saltiel will replace Yee at Janus Worldwide. Saltiel has been an analyst at Janus for seven years and has run Janus Advisor International Equity JAIEX since its November 2006 inception, with good results in that relatively brief span. He previously covered tech and health-care stocks for RS Funds. Saltiel will likely take a more growth-oriented approach at Worldwide than Yee did, though he will be sensitive to valuations and will limit the fund's sector and country bets versus the MSCI World Index.

Kolb will now run Janus Global Opportunities solo. The impact here should be minimal because Kolb was already responsible for most of the day-to-day work.

More Heads Roll at AllianceBernstein
Another 237 employees have been laid off at AllianceBernstein as the firm continues cutting costs. The latest wave affected 31 members of the investment team, including analysts, portfolio managers, and research directors. Since December 2007, the number of investment professionals has dropped from 617 to 540, a 12% decline. The most recent casualties include Eric Hewitt, co-head of the consumer sector since 2007; Jeff Singer, CIO of the Canadian value investment policy group; senior growth team members Jim Russo and Thomas Zottner, comanagers of  AllianceBernstein Small/Mid Cap Growth (CHCLX); and Craig Ayers, part of the relative value team that runs  AllianceBernstein Growth & Income (CABDX).

Several analysts on the growth and value teams were also let go. After three rounds of layoffs during the past several months, the analyst ranks stand at 258 as of March 31, 2009, down from 308 in December 2007. Meanwhile, the firm recently shuttered its China office and laid off four analysts there, moving operations to the Hong Kong office.

The employee headcount now stands at 4,760, a 15% reduction since December 2007. The firm has been under steep pressure as assets have plunged during the market downturn.

Money Markets Still Guaranteed
The Treasury Department announced that it is extending the Money Market Funds Guarantee Program through Sept. 18, 2009. The temporary program was originally set to expire on April 30, 2009, but will continue as the Treasury works to develop permanent regulatory reform to address systematic risk in the financial market. The program was launched in September 2008 to protect investors after some money market funds faced extreme liquidity pressure and the Primary Reserve Fund's NAV dropped below $1. All public money market funds are eligible to participate for a fee. Currently, the program protects more than $3 trillion in assets.

The extension comes on the heels of the Investment Company Institute's call for money market reform, as reported in Fund Times. Vanguard recently announced that all of its money market funds will comply with the recommendations proposed by the ICI's Money Market Working Group.

Helios Bond Funds Bite the Dust
Helios Select High Income HIFAX, Helios Select Intermediate Bond HSIBX, and Helios Select Short Term Bond MSBIX, three former Regions Morgan Keegan bond funds that were given the Helios name after they were acquired by Hyperion Brookfield Asset Management, will liquidate, pending shareholder approval. The news is hardly surprising; all three funds have suffered disastrous losses during the subprime meltdown as former manager Jim Kelsoe's bets on risky and illiquid mortgage-related asset-backed securities went awry. From the onset of the credit crisis in July 2007 through April 1, 2009, Select Intermediate Bond lost a staggering 82%, Select High Income shed 72% of its value, and Select Short Term Bond Fund is down 62%.

The losses triggered mass redemptions, and the funds struggled to stay afloat with diminished asset bases, as we detailed in this July 2008 article. High Income, a billion-dollar fund just three years ago, now has just $16 million in assets. Intermediate Bond dropped from $632 million to $9 million during the past three years, and Short Term now has just $1 million in assets.

Open and Shut Cases
Small-growth standout  Buffalo Small Cap (BUFSX), which reopened to new investors in November 2008 and planned to close once assets reached $1.3 billion, will stay open indefinitely. While it's still $200 million away from that threshold, the fund's management decided that market conditions warrant more flexibility.

 Morgan Stanley Institutional US Real Estate (MSUSX) and Morgan Stanley International Real Estate (MSUAX) have also reopened. Lead manager Theodore Bigman has amassed a solid record at the two reasonably priced funds, though both have come under pressure during the market downturn and have faced dwindling asset bases.

Meanwhile, Morgan Stanley International Growth Active Extension MAXAX is expected to liquidate on April 30. The foreign large-blend fund launched in 2007 and has just $4 million in assets.

Marriages of Convenience
Old Mutual has merged several tiny funds: Small-growth fund Old Mutual Developing Growth OAEGX is now part of Old Mutual Strategic Small Company (OSSAX); Old Mutual Mid Cap OAMJX merged with Old Mutual TS&W Mid-Cap Value OTMAX; Old Mutual Select Growth OAHEX was absorbed by Old Mutual Large Cap Growth OLGBX; and Old Mutual Small Cap OSAMX joined Old Mutual TS&W Small Cap Value (OACVX). Each combined fund has less than $150 million in assets.

Katie Rushkewicz Reichart, CFA has a position in the following securities mentioned above: MSUSX. Find out about Morningstar's editorial policies.