Tide against Janus as outflows mount

Tide against Janus as outflows mount
Tenth straight quarter for negative flows; profit off 46 percent as well
DEC 28, 2011
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.

Latest News

GLP-1 users are trading retirement savings for their prescriptions
GLP-1 users are trading retirement savings for their prescriptions

A Nationwide survey finds 47% of GLP-1 users have never discussed the drugs’ financial impact with an advisor, even as many dip into savings.

Inspired Healthcare sale price of properties is 59% of $1.2 billion sold by advisors
Inspired Healthcare sale price of properties is 59% of $1.2 billion sold by advisors

The hundreds of millions of dollars from a sale of Inspired Healthcare properties does not mean an immediate windfall for investors.

Class action alleges Webull misled investors about China operations
Class action alleges Webull misled investors about China operations

Its SEC filings said one thing - a congressional probe said another.

Investors accuse Netcapital of inflating revenue through sham deals
Investors accuse Netcapital of inflating revenue through sham deals

Sham agreements allegedly padded revenue by 345%.

Pre-retirees are looking for flexibility, security, and guidance when it comes to retirement income: Cerulli
Pre-retirees are looking for flexibility, security, and guidance when it comes to retirement income: Cerulli

"Most pre-retirees are uncomfortable making key retirement income decisions without an advisor's help," said Chris Bailey of Cerulli.

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor