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By Christine Benz and Greg Carlson | 07-18-2013 12:00 PM

What Happened to Janus?

What the exodus of management talent means for the former growth-investing powerhouse, and what some of those managers are up to now.

Christine Benz: Hi, I'm Christine Benz for Morningstar.com.

Janus was the hot fund company in the late '90s, but the firm has since suffered from mixed performance and a spate of manager departures.

Joining me to discuss Janus, as well as a related firm composed of former Janus managers, is Greg Carlson. He is a senior fund analyst with Morningstar.

Greg, thank you so much for being here.

Greg Carlson: Thanks. Great to be here, Christine.

Benz: Janus has recently had some big high-profile manager changes. We've seen changes on Triton Fund, Venture Fund, Janus Fund, Janus Twenty, Janus Forty--a lot of changes. You've been reviewing the firm's parent grade, assessing the firm's culture. What do all of these manager changes mean for your view of the firm's corporate culture or that parent grade?

Carlson: We do think these changes negatively impact the culture at Janus, and we've lowered the firm's parent rating to a Neutral.

Benz: What kinds of things are you looking at? Are you looking at why the managers left? What makes you think that the culture perhaps isn't what it once was?

Carlson: Well, you had the best-performing equity managers in-house leaving, so that was a real blow to the firm--the best-performing managers by far. That really hurts.

And right now, they just don't have a lot of attractive equity funds, and that's been their real calling card over the years, obviously.

Benz: So, there have also been some issues at the very top of the firm, where you have seen a lot of CEOs come and go over the years. Let's talk about how that intersects with the firm's parent grade.

Carlson: That's correct. Since founder Tom Bailey, stepped down from the CEO role in 2002, the firm has had four CEOs, plus an interim CEO. Some of that instability was caused by Janus' involvement in the market-timing scandal of 2003, but they've had increased turnover since then as well. And we think that probably has a negative impact on the firm's attractiveness to promising investors.

Benz: Let's step back and discuss what happened. You and I were both watching Janus in the late '90s; it was really at the top of the heap, the top asset gatherer, a lot of funds at the top of their performance charts. In hindsight, a lot of that was maybe [related to] the dotcom boom and bust. But are there any other issues that you think have contributed to Janus' change in fortunes over the past decade?

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