Janus CEO Weil hopes for Bill Gross-run ETF

Money manager looks to better reach advisers by selling the fast-growing funds, leveraging newly acquired VelocityShares.

Janus Capital Group Inc. chief executive Richard M. Weil indicated Thursday that his firm is hard at work at bringing Bill Gross back to the exchange-traded fund world.
“I know that we’re thinking hard about how to put Bill’s excellence and reputation together with the VelocityShares folks and the ETF space,” he said. “That will take some time. ETFs are not immediately launchable.”
Mr. Weil said ETFs will be crucial to winning the business of financial advisers, who, along with other intermediaries such as brokers, account for 60% of the assets the firm manages.
“We have been unable to serve those folks in the way they wanted to be served, with that kind of vehicle,” he said.
Asked whether ETFs would cannibalize the core mutual fund business, Mr. Weil said if funds were going to lose market share to ETFs, “that is going to happen whether or not we participate in the ETF business.”
Mr. Weil spoke for the first time on his goals for Mr. Gross and the firm that distributes VelocityShares exchange-traded products as his company reported earning $40.9 million in its third quarter, or 22 cents per share, up more than 25% from the previous year, on higher total assets.
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But the $174.4 billion fund manager is nonetheless trying to reverse what Morningstar Inc. estimates are 14 consecutive quarters of investor redemptions from its mutual funds.
Tough markets also weighed on the firm’s revenue during the last quarter. The firm saw $2.1 billion in investor redemptions and market depreciation totaling $1.2 billion in the quarter ended Sept. 30.
Mr. Gross was not a portfolio manager for Janus during the quarter. After the Sept. 26 announcement he would leave Pacific Investment Management Co., which he had co-founded in 1971, he joined Janus Sept. 29 and began managing the fund officially a week later.
Mr. Gross now runs the Janus Global Unconstrained Bond fund (JUCAX), serves as a member of the firm’s global allocation investment committee and is widely expected to be involved in the development of additional products.
Janus chief financial officer Jennifer McPeek declined to provide an estimate of the firm’s fund sales since Mr. Gross joined the firm. In September, investors withdrew $23.5 billion from the Pimco Total Return Fund (PTTAX), which he used to manage.
The $3 billion ETF version of that fund (BOND) has been among the most popular actively managed products in that space.
On Oct. 13, Janus agreed to buy VelocityShares’ holding company for at least $30 million. Ms. McPeek said additional payments over the next four years could total $36 million if the unit hits certain growth targets.