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Money Management

Janus Henderson reports 4% AUM gain in quarter, but outflows continue

Andrew Formica
Andrew Formica

Strong equity markets helped increase Janus Henderson Group's assets under management to $345 billion as of June 30, up a combined 4% from the three months earlier and up 8.5% from a year ago when Janus Capital Group and Henderson Global Investors were separate companies, shows the firm's earnings release on Tuesday.

Denver-based Janus and London-based Henderson closed on a cross-border merger on May 30 in an effort to build a larger global investment organization that could better fight the flight away from active strategies and at the same time achieve cost synergies.

Despite the uptick in overall AUM in the quarter, the combined company reported $1 billion in net outflows. The largest outflows were $1.8 billion from INTECH, Janus Henderson's quantitative investment group, followed by $900 million in fixed income and $400 million from multiasset strategies. On the positive side, fundamental equities reported $1.2 billion in net inflows and alternatives had net inflows of $800 million.

The $1 billion in net outflows was down from the previous quarter when Janus reported $4.3 billion in net outflows and Henderson reported outflows totaling 1.8 billion ($2.3 billion). In the quarter ended June 30, 2016, the two companies had combined net outflows of $7.1 billion.

Janus Henderson co-CEO Andrew Formica said in remarks to equity analysts during a conference call Tuesday that fundamental equity inflows of $1.2 billion were a turnaround from the previous quarter's $2.4 billion in net outflows while INTECH's $1.8 billion in outflows had been reduced from $3.8 billion the previous quarter.

Mr. Formica cited stronger investment performance as helping flows.

"As an organization, Janus Henderson is driving toward achieving outpaced organic growth and market share gains," he said. "For this average result is not where we'd like to be and we have more work to do, but we are encouraged by the near-term progress".

Janus Henderson on Tuesday reported second quarter net income of $41.7 million, down 2% from the previous quarter and down 9.9% from the year-over-year quarter.

Revenue of $384.8 million was up 67.6% from the previous quarter and 49.6% from the second quarter of 2016.

The company reported it had achieved cost synergies as of June 30 of $57 million and expected to realize $85 million in cost savings within 12 months. It said the cost savings are being achieved mostly by reductions in company head count.