This Fund Offers Solid Performance in Down and Up Markets

Christopher Franz: Bronze-rated Janus Henderson Mid Cap Value, formerly known as Perkins Mid Cap Value, is finding its footing. Led by a team at Perkins Investment Management--a wholly owned subsidiary of Janus Henderson Investors--this fund's management structure helped it weather the departure of a former comanager and firm CIO in 2015. The current team, which consists of firm CEO Tom Perkins, Kevin Preloger, and newest addition Justin Tugman, adhere to the firm's defensive investment approach, which prides itself on outperforming in down markets.

Key to their investment process is an avoidance of speculative positions and preference for companies with strong free cash flow, reasonable debt levels, and healthy balance sheets. Managers have made some recent adjustments to the fund, such as limiting its cash position to better keep up in rising markets, as well as reducing the number of stocks and increasing their concentration in top holdings to better focus on top ideas.

These efforts have seemingly paid off. Following the fund's 2015 result, where it outperformed the Russell Mid Cap Value Index and peers in a down market, it posted a strong absolute gain of nearly 19% in 2016, which edged peers but slightly lagged its benchmark. This performance pattern--losing less in down markets and participating in frothy markets--is to be expected given the (team's) preference for high quality companies and their emphasis on downside protection.

This attractive performance profile, coupled with reasonable expenses, boost our conviction in the fund.