(September 28) – “Janus Funds’ streak of pulling in new investor money every month since late 1997 may be on its last legs,” writes Aaron Lucchetti in today’s Wall Street Journal.
“After 32 consecutive months in which the Denver fund firm, powered by the performance of surging technology-heavy mutual funds, has been the vacuum cleaner of the mutual-fund world, this month is shaping up differently. Through Monday, investors have pulled a net $68.3 million out of Janus’s retail stock funds during September, a spokesman said Wednesday. The Janus funds haven’t ended the month with negative net cash flow since December 1997.”
“Janus is a major investor in some major high-tech companies, and a pullback from Janus funds by investors could weaken demand for shares of those companies. ‘I think the tide has turned a little bit for Janus,’ says Burton Greenwald, a fund consultant in Philadelphia. Investors are ‘starting to show concern,” he says, adding that the recent weak numbers for Janus funds “are the first cracks in an impregnable facade.’ “
“Officials at Janus, which is 81.5% owned by Stilwell Financial Inc., have other explanations. The weaker sales numbers in September, as well as a slowdown in August, stem from Janus’s having closed five mutual funds to new investors this year, says Jane Ingalls, a Janus spokeswoman. They were closed to maintain investment performance, she adds.”
“Janus, with $306 billion in assets under management, also remains the best-selling fund firm this year by a wide margin, with investors pouring $37.8 billion into the company’s stock and bond funds through August, more than twice as much as the closest competitor, according to figures released Wednesday by Financial Research Corp., Boston. For the year through July, about $231.4 billion in net new cash has flowed into stock mutual funds — $166.6 billion when the exodus from bond funds is included — according to the Investment Company Institute, a Washington, D.C., trade group.”
” ‘It’s a mistake to read too much into’ recent weakness at Janus, says Kurt Cerulli, principal of Cerulli Associates Inc. ‘There’s concern’ among investors, but ‘when you put it against the larger backdrop, they’re still in very good shape.’ “
“Still, if investors accelerate their pulling of money from Janus’s stock funds, it could put pressure on some of the high-profile technology companies in its portfolios. According to a recent analysis of Janus’s federal filings by Web site bigdough.com, the firm owns more than 10% of 44 companies, as well as big stakes in bellwether technology companies such as Sun Microsystems Inc., Nokia Corp. and Cisco Systems Inc. Continued investor withdrawals may force Janus portfolio managers to cut some positions to meet redemptions.”
” ‘That kind of scenario can build on itself’ and force portfolio managers to sell their holdings, says Stewart H. Welch III, a financial planner in Birmingham, Ala.”