Tide against Janus as outflows mount

Tenth straight quarter for negative flows; profit off 46 percent as well

Jan 26, 2012 @ 9:57 am

Janus Capital Group Inc. (JNS), owner of the Janus, Intech and Perkins funds, said fourth-quarter profit fell 46 percent after stock markets declined and clients withdrew money for the 10th consecutive quarter.

Net income fell to $35.7 million, or 19 cents a share, from $65.9 million, or 36 cents, a year earlier, the Denver-based company said today in a statement. Profit beat the 15-cent average estimate of 18 analysts surveyed by Bloomberg.

Chief Executive Officer Richard M. Weil has struggled to halt customer defections from the firm's active stock funds as equity markets have declined and investors turn increasingly to passive vehicles, especially exchange-traded funds. Profit has also been hurt by the funds' returns and performance-related cuts to fund-management fees.

“To the extent they are able to improve performance at some bigger flagship products, we would expect flows to follow, but they don't have control over the broad derisking we've seen across the industry,” Michael Kim, an analyst with Sandler O'Neill & Partners LP in New York, said in a telephone interview before results were announced.

The MSCI ACWI Index of global stocks fell 9.4 percent in 2011 and the Standard & Poor's 500 Index of U.S. equities was almost unchanged. Investors withdrew $84.2 billion from U.S.- registered equity mutual funds in the same period, while pouring $61.7 billion in equity ETFs, according to Chicago-based research firm Morningstar Inc.

Janus doesn't offer ETFs and about 90 percent of the assets it manages are in stocks.

RELATED ITEM Top actively managed fund firms in 2011 »

The performance of Janus's funds has deteriorated relative to their benchmarks. Of Janus's largest 20 stock and balanced funds, representing $72.2 billion in assets, four beat their benchmark index in the year ended Jan. 24, compared with nine over a three-year period and 15 over the past five years, according to data compiled by Bloomberg.

Asset-management firms such as Janus earn fees on the funds that they manage for clients. Janus's mutual funds also charge fees that rise or fall in connection to the funds' performance over 12 to 36-month periods. Fee cuts reduced revenue by $4.2 million in the third quarter.

BlackRock Inc. (BLK), the world's largest money manager, said Jan. 19 that fourth-quarter net income fell 16 percent to $555 million. The firm also said it would cut 3.4 percent of its workforce.

Janus reported earnings before the start of regular U.S. trading. Its stock has declined 42 percent in the past year year, worst among the 20-member Standard & Poor's index of asset managers and custody banks. The index fell 18 percent during the same period.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

What's behind the TCA, ETrade deal?

Deputy editor Bob Hordt talks with senior columnist Jeff Benjamin about what each party in the recent acquisition stands to gain by joining forces.

Latest news & opinion

As DOL fiduciary rule dies, variable annuities come alive — sales up for first time since 2014

Indexed annuity sales also broke their previous quarterly sales record.

Cambridge Investment Research bags mid-sized broker-dealer

Broker Dealer Financial Services, an IBD with 150 reps and advisers, and $3.5 billion in assets, will become a Cambridge OSJ.

HighTower on prowl for new CEO, Weissbluth to become chairman

Move is latest in Chicago-based RIA consolidator's effort to expand senior leadership team.

What's in a name? For TCA by ETrade, everything

Trust Company of America is gone, and there's big buzz over the name change. But turning the custodian into an industry powerhouse will take a lot longer — if it happens at all.

When it comes to regulating AI in financial services, murky waters are ahead

Laws are unclear on how the technology fits in with compliance.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print