Janus profit falls 13% as clients keep fleeing

Janus Capital Group Inc., owner of the Janus, Intech and Perkins funds, last week reported a 13% percent decline in profit as clients pulled out money for the 14th consecutive quarter. Net income for the three-month period ended Dec. 31 fell to $31.2 million, from $35.7 million a year earlier, the company said last Thursday. “Mutual fund performance fees remained quite negative, though that was offset somewhat by a big up-step in performance fees at Intech,” said Michael Kim, an analyst with Sandler O'Neill & Partners LP. Intech uses mathematical models to choose securities.

LESS EQUITIES EMPHASIS

As investors have shunned stocks for bonds, chief executive Richard M. Weil has worked to reduce Janus' dependence on equities, strengthening his fixed-income team and planning the introduction of multiasset products known as absolute-return funds. Poor long-term fund performance led to continued withdrawals and lower fees, even as Janus' fixed-income investments reached $26.4 billion, or about 17% of total assets.

FUND REDEMPTIONS

Last year, total assets increased 5.8% from 2011 to $156.8 billion, led by a 13% increase in global stocks, based on the MSCI AC World Index. Clients withdrew a net $3.6 billion in the quarter, excluding money market funds. Only fixed-income products attracted money, with about $700 million in net deposits. Although assets rose, Janus earned less in investment-related fees because of performance measures that reduce fees when funds fail to meet their benchmarks over trailing periods of 12 to 36 months. Negative-performance fees cost Janus $13.6 million in the quarter and $75.4 million for the year. Fees from mutual funds were reduced $21.9 million in the quarter because of underperformance. “We expect this level of negative- performance fees to continue for the next several quarters,” chief financial officer Bruce Koepfgen said during a conference call with analysts, referring to mutual fund fees.