DENVER - For the beating it's taken at the hands of the market, Janus Capital Corp. hasn't been knocked out by any institutional clients.
After a meteoric five-year rise from a growth mutual fund boutique to major player, the Denver-based investment firm saw its asset base plummet to $203 billion at the end of March from $248 billion as of Dec. 31.
But the sharp decline in assets at the predominantly growth shop primarily is due to market depreciation and rebalancing - not the loss of institutional clients.
Mark Whiston, president of retail and institutional services at Janus, said the firm has been added to several defined contribution platforms in 2001 and has gained two defined benefit separate account mandates worth more than $100 million each since February.
He said activity has not slowed down in the defined benefit channel, and Janus is in several finals for midcap and large-cap growth accounts.
Consultants say plan sponsors and participants aren't overly concerned with the hit that Janus' growth investments have taken in the last six months or so. "Janus is still performing as we would expect them to perform. It's certainly not their market," said Brian Ternoey, consultant at Curcio Webb LLC, Pennington, N.J. Curcio Webb has both defined contribution and defined benefit clients that use Janus growth investments.
Mr. Ternoey said despite the length and severity of the stock market downturn, defined contribution plan participants haven't shifted a significant number of assets from Janus portfolios, or growth managers in general. "We haven't seen a lot of panic," said Mr. Ternoey.
Little movement
Mary Willett, director of supplemental retirement plans for the $1.2 billion 457 plan of the State of Wisconsin Investment Board, Madison, said the participants aren't moving much money out of aggressive offerings. In fact, the relatively aggressive Janus Fund has the most assets in the plan - $192 million. The Janus Fund attracted $1.6 million in new money in February 2000, and $1.5 million in new cash flows in February 2001. Participants in the Wisconsin plan now are directing new money to stable value and fixed-income investments.
Ms. Willett said the Janus Fund performed as expected in 2000, beating its benchmarks for the one-, three- and five-year periods. But, she said, officials at the fund will continue to monitor performance, as another down year could affect the three- and five-year numbers.
The institutional side of the business has been more stable than the retail side this year. "We can't do anything about a downdraft in the market that wipes out performance," said Mr. Whiston. "But in a market like this, institutional flows have contributed substantially to a steadier asset base."
While the retail mutual fund business at Janus has experienced net outflows since September 2000, the institutional business has seen steady growth. Janus institutional saw net inflows through all of 2000 and in January 2001.
February and March were the first two months in which Janus institutional saw net outflows, although not as dramatic as on the retail side, said Shelly Peterson, a Janus spokeswoman. She said they would not release institutional flow numbers. Mr. Whiston said the institutional outflows in February and March were due to rebalancing.
`Working off that bubble'
Laurie Tillinghast, vice president of investment products at ING Aetna Financial Services Inc., Hartford, a defined contribution plan provider, said rebalancing has been dramatic since March 2000. Of the 29,000 ING Aetna plan sponsors offering funds from Janus, 80% of the cash flows were going to Janus funds in March 2000. "We definitely had a bubble with Janus, and we're working off that bubble the same way the technology bubble is working off," she said.
The flows have receded, she said, dropping to 55% in July, 40% in October, 20% in January, to about 15% through February. "It has leveled off to a more comfortable share of the cash flows," she said.
But she said plan sponsors remain happy with the firm. "The key for Janus is they have stayed true to their style," Ms. Tillinghast said.
Mr. Whiston said that Janus hopes its brand name has "resonated in the marketplace to the point that we're one of the firms they're going to try to hang on to."
Janus officials are hoping the firm's broader asset base - which is now about 58% institutional - and its recent foray into value investments can help it navigate the choppy markets.
At the end of 2000, the firm had $138.9 billion in institutional assets and $108.7 billion in retail assets, the first time institutional assets outweighed retail.
Mr. Whiston said he's not surprised that Janus shareholders haven't shifted a significant amount of assets away. "The benefit of our institutional asset base is that they take three- to five-year time horizons in assessing performance and understand that this is a cyclical business."
