Janus Capital snaps 5-year outflow streak in Gross' first quarter with firm

Janus Capital Group announced Thursday it closed the quarter ended Dec. 31 with $2 billion in net inflows, ending a streak that had resulted in net outflows for 21 straight quarters since June 30, 2009.

Janus finished the fourth quarter with $183.1 billion in total assets under management, up 5% from Sept. 30 and up 5.3% from the previous year.

Revenue of $254.8 million was also up 12.6% in the fourth quarter from a year earlier and net profit of $46.7 million was up 16.7% from a year earlier.

Janus CEO Richard Weil, who raised the firm's visibility by hiring William H. Gross to run the firm's unconstrained bond fund in September, said in an earnings call with analysts Thursday that the firm needs to have a sustained level of net inflows beyond one quarter.

“We're reporting on progress rather than victory,” Mr. Weil said.

Janus finished the year with $4.9 billion in net outflows, which Mr. Weil said was a “substantial improvement” from the $19.7 billion in net outflows in 2013, but he also noted that it was still “a negative number.”

Fixed-income net inflows for the quarter were $2.8 billion, compared to net outflows of $300 million in the previous quarter. Janus' long-suffering fundamental equity strategies and INTECH, its quantitative equities subsidiary, saw net outflows of $200 million and $600 million, respectively, compared to $2.1 billion in net outflows and $300 million in net outflows, respectively, the previous quarter.

A sizable amount of Janus' inflows in the quarter was from Mr. Gross himself. Mr. Weil confirmed that Mr. Gross has placed $700 million of his personal money into the unconstrained fund, which had $1.38 billion in assets as of Dec. 31.

The fund had $13 million in assets before Mr. Gross joined Janus on Sept. 26.

Analysts predicted that Mr. Gross could bring more than $50 billion in assets to Janus over the next two years but part of that number is dependent on attracting institutional investors.

Mr. Weil told analysts that Janus is engaged in a daily battle to win the support of consultants to advise their institutional clients to invest in Mr. Gross' fund.

“Institutional fixed income in many places is driven by consultants,” Mr. Weil said. “The consultants are famously slow to adopt new things. And so the efforts to get them to adopt a new global unconstrained fund managed by Mr. Gross, is sort of a balance between his … long-term excellence and huge reputation, and their discomfort with new things.”

Mr. Weil said Janus is looking in the near term to investors for which consultants don't always control inflows, for more assets for Mr. Gross. Mr. Weil cited the example of investor George Soros, whose Soros Fund Management invested $500 million in a separate account invested in the unconstrained strategy run by Mr. Gross.